According to Infrastructure Minister Oleksandr Kubrakov, Ukraine has exported around 13 Mt of commodities via three of its Black Sea ports since opening them last August, with 430 ships calling at Ukrainian sea ports and 400 departing over the period.

Finance Minister Serhiy Marchenko said on Dec. 27 that Ukraine’s upcoming Eurobond restructuring would pursue several goals including (i) avoiding a default; (ii) creating the prerequisites for market return, which may become necessary already in 2025-2026; and (iii) meeting the IMF’s debt sustainability criteria. Marchenko also said that Ukraine was choosing from among several action plans for the upcoming restructuring. He confirmed that local debt would not be restructured due to domestic borrowings being an important financing source for military expenditures.

The Ukrainian Finance Ministry reported total foreign aid inflows of $42.6bn in 2023, implying c. $5.0bn in December. The largest donors last year were the EU, with EUR 18bn of concessional loans provided under the MFA+ program, and the US, with $11bn of grant financing distributed via the World Bank. Other sizable inflows included $4.5bn from the IMF, part of a $15.4bn EFF program; $3.6bn from Japan, structured as guarantees to the World Bank; and a $1.8bn loan from Canada. December inflows included $2.2bn of Japanese aid, the final EU aid tranche of EUR 1.5bn, a $0.9bn IMF disbursement, and $0.2bn of grants from other bilateral partners allocated via the World Bank.

The NBU commented on the preliminary results of its sustainability assessment of the top-20 banks, saying that the stress test confirmed the banking system’s high safety margin, with only three banks facing heightened risks of capital losses over a three-year horizon, including one state-owned bank. Nonetheless, Pervin Dadashova, head of the NBU’s financial stability department, said this bank was not expected to need recapitalization support from the state budget.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, has published its 1Q24FY (July-September 2023) financial results, reporting sales of $546m (-26% q-o-q and -17% y-o-y), EBITDA of $19m (an improvement from $56m EBITDA loss booked in 4Q23FY, but 89% lower y-o-y) and net loss of $31m (vs. $138m loss in 4Q23FY and $162m net income in 1Q23FY). End-1Q24FY net debt stood at $620m (+4% q-o-q and -59% y-o-y), yielding a net debt to LTM EBITDA of 1.6x (vs. 1.1x as of end-2023FY) and EBITDA coverage ratio of 3.5x (vs. 4.4x in 2023FY).

There have been no major changes on the battlefield since our pre-holiday update two weeks ago. Russian forces have remained on the offensive, making small gains in the eastern Donetsk region around Avdiyivka, which has been the main axis of their attacks since October, and Bakhmut. Russian assaults, with equally marginal advances, also persisted in the northeastern sector, along the Kharkiv-Luhansk region border. In the south, Russian troops slightly pushed back Ukrainian positions in the salient north of Tokmak in the Zaporizhya region, which was the main focus of the Ukrainian counteroffensive last summer. In other sectors, the battle lines essentially did not move.

The Ukrainian Finance Ministry and a group of bilateral creditors including Canada, France, Germany, Japan, the UK and the USA signed amendments to their memorandum of understanding (MoU) to extend the suspension on Ukraine’s debt payments until March 2027, i.e. the end of the current IMF program for Ukraine.

The State Statistic Service (SSS) reported retail trade turnover growth of 11.6% y-o-y in real terms in 9M23, up from 7.3% y-o-y in 1H23 and -9.1% in 1Q23. Construction rose by 21% y-o-y in 9M23, picking up from 18.4% in 1H23, while growth in passenger transportation turnover accelerated to 23% y-o-y from 16% in 1H23. The rate of decline in cargo transportation slowed to -8.4% y-o-y from -14% respectively.

Speaking at a meeting of the Steering Committee of the Multi-agency Donor Coordination Platform for Ukraine, Finance Minister Serhiy Marchenko said foreign financial aid to Ukraine would total $42.3bn for the full year 2023, up from YTD inflows of slightly more than $39bn. He also said that Ukraine’s 2024 external funding needs shrank to $37.3bn from $41bn thanks to revenue mobilization measures, intensified borrowings, and other steps. For its part, the Steering Committee reiterated its commitment to support Ukraine and discussed ways to address Ukraine’s budgetary needs in early 2024, including by redeploying the existing support.

The Ukrainian Economy Ministry estimated real GDP growth at 4.0% y-o-y in November (+/-2.0pp), down from 10.5% y-o-y in October and 9.1% y-o-y in September and keeping 11M23 growth at 5.5% y-o-y.

Fitch Ratings upgraded its Long-Term Issuer Default Rating (IDR) on Naftogaz too CC from RD following the company’s Eurobond restructuring. The rating agency also affirmed Naftogaz’s senior unsecured notes issued by Kondor Finance at C, with a recovery rating of RR6. Fitch noted that Naftogaz continued to carry a high credit risk even after the debt restructuring due to company liquidity being “extremely weak and unpredictable” amid high operational risks, slow payments for gas, and limited external funding options. Fitch said that Naftogaz was likely to generate negative free cash flow in 2023 and 2024 without state support, with its cash position seen worsening substantially by end-2023 from $1.5bn as of end-1H23. (Fitch Ratings)

President Volodymyr Zelensky held a year-end press conference yesterday. Below are the main highlights:

The Ministry of Finance placed UAH 7.2bn ($193m) of hryvnia-denominated bonds and EUR 27m of F/X-denominated paper at a primary auction yesterday.

According to Infrastructure Minister Oleksandr Kubrakov, Ukraine has exported over 10 Mt of commodities via its Black Sea corridor since opening it in August, with 337 ships calling at Ukrainian Black Sea ports and 302 exiting Ukrainian waters over the period.

The State Statistic Service (SSS) reported industrial production (IP) growth of 2.4% y-o-y in 9M23, up from -2.9% y-o-y in 1H23 and -16% in 1Q23.

Metinvest expects to ramp up iron ore capacity utilization to 75-80% by the end of 1Q24 from current 45-40% if Ukrainian Black Sea ports continue to operate in stable manner, CEO Yuri Ryzhenkov said in a media interview.