MHP announced on Sep. 25 a tender offer to purchase for cash any and all of its $500m notes maturing on May 10, 2024. The repurchase price was set at 85% of par before Oct. 6, 2023, and 75% before Oct. 26, 2023. The company will finance the buyback with $400m of financing from three undisclosed international financial institutions (IFI) and its available cash balances. All repurchased notes will be canceled. The proposed tender offer came as a positive surprise, manifesting that refinancing with IFI funding is a viable option at least for selected Ukrainian corporates despite IFIs’ reluctance observed to date to allow to use their funds to repay private creditors during wartime. Notably, the proposed tender offer consideration range of 75-85pt came in line with our NPV estimates for the most likely restructuring scenarios. With the early tender offer price of 85 offering a sizable 16pt premium to the bond’s closing bid price on Friday and corresponding to the upper bound of our estimated NPV range for prospective restructuring scenarios, we expect a substantial amount of the 2024 notes to be tendered. The bond rallied yesterday to close at 83/86pt, meaning the upside potential we estimated for the MHP 24s has fully materialized. We thus close our Long recommendation on the issue.

According to Ukrainian Deputy PM Oleksandr Kubrakov, three more ships have docked at Ukraine’s Black Sea ports of Chornomorsk and Pivdennyi to be loaded with 127 kt of agricultural produce and iron ore, having sailed via a temporary corridor offered by the Ukrainian military. In the meantime, two other ships carrying 21 kt of wheat, which had sailed to the Ukrainian sea ports on Sep. 16, were reported to have successfully reached the Bosporus.

Real GDP increased by 19.5% y-o-y in 2Q23 after falling by 10.5% in 1Q23, with the seasonally adjusted tally rising by 0.8% q-o-q on top of 2.4% in 1Q23.

Ukraine has received another $1.25bn grant from the US, the seventh disbursement from a $9.9bn aid package. Similar to the previous tranches, the latest one was channeled via the World Bank’s PEACE project and will be used to reimburse state budget expenses such as public sector wages and social payments.

Ukraine’s gross external debt (GED) rose by 13% or $18bn YTD in 1H23, to $148bn, equivalent to 93% of GDP, according to an NBU estimate, up from 81% as of end-2022. As per the NBU, year-head external debt amortizations (1H23-1H24) total $41bn, in line with $38-42bn in the four previous quarters. At the same time, adjusting this amount for trade loans, overdue arrears and overnight interbank loans yields a much smaller tally of $13bn, on top of $3.6bn of interest payments.

Hryvnia-denominated deposits at Ukrainian banks inched up by 0.1% m-o-m to UAH 1,419bn in August (+38% y-o-y), following +3.2% m-o-m growth in July. F/X deposits dipped by 0.4% m-o-m to $18.8bn (+16% y-o-y) after edging 0.1% m-o-m higher in July. Gross UAH loans rose by 1.2% m-o-m in August, to UAH 703bn (still -7.0% y-o-y), after increasing by 0.5% m-o-m in July. Gross F/X loans inched up by 0.5% m-o-m to $6.7bn (-18% y-o-y). Net UAH loans (gross loans less provisions), according to the latest reported data, increased by 0.9% m-o-m in July, to UAH 441bn (-17% y-o-y), on top of 0.9% growth in June. Net F/X loans were up 0.2% m-o-m but down 19% y-o-y.

The Verkhovna Rada passed yesterday an amended bill on the reinstatement of electronic asset declarations for public officials, adding a provision to reopen the declarations database for public access no later than 60 days after the bill becomes law. The legislation was supported by 341 lawmakers, more than a two-thirds majority. President Volodymyr Zelensky vetoed a previous version of the bill earlier this month, disagreeing with an amendment added by lawmakers to ban the public disclosure of declarations for another year.

Naftogaz has announced it has made a cash payment on its 2022 notes and a consent fee payment on its 2026 notes, thereby fully satisfying the conditions of its earlier consent solicitation in respect of its 2022 and 2026 bonds as of Sep. 20, 2023.

The Ministry of Finance placed UAH 5.6bn ($152m) of hryvnia-denominated bonds and $253m of F/X-denominated paper at a primary auction yesterday.

Ukrainian Railways (RAILUA) CEO Yevhen Liashchenko confirmed in a media interview that the company had revised its 2023 financial plan, projecting a small net profit for the full year as opposed to the initially expected loss of UAH 20.2bn. Amended projections have been submitted to the government for approval. Liashchenko said the company is currently breakeven and expects to turn profitable in 9M23.

Metinvest reported 1H23 sales of $3.6bn, up 18% h-o-h and down 33% y-o-y, with metallurgical segment revenue up 15% h-o-h and down 33% y-o-y at $2.4bn and mining segment revenue up 25% h-o-h and down 32% y-o-y at $1.1bn. EBITDA totaled $487m, up 55% h-o-h and down 69% y-o-y, with metallurgical segment EBITDA at $166m (vs $287m in 1H22 and -$20m in 2H22) and mining segment EBITDA at $358m (+44% h-o-h and -72% y-o-y).

The State Customs Service reported a merchandise trade deficit of $2.8bn in August, flat m-o-m, as exports rose by 12% m-o-m to $2.7bn (yet -19% y-o-y) while imports increased by 4.4% m-o-m and 20% y-o-y to $5.5bn. In 8M23, the merchandise trade gap stood at $16.6bn, deteriorating from $5.6bn in 8M22 as exports fell by 16% y-o-y to $24.5bn and imports rose by 19% y-o-y to $41.1bn.

Iron ore exports from Ukraine rose by 13% m-o-m to 1.5 Mt in August, bringing the 8M23 volume to 11.2 Mt (-44% y-o-y). In value terms, iron ore exports increased by 3% m-o-m to $148m in August and slid by 53% y-o-y to $1.2bn in 8M23.

The Cabinet of Ministers submitted its 2024 state budget bill to parliament, projecting a deficit of $39bn or 20% of GDP, down from $48bn or 31% of GDP envisaged by the current version of the 2023 state budget law (with the latest amendments yet to be approved by the legislature). The macroeconomic forecast underpinning the 2024 budget draft assumes real GDP growth of 5.0% y-o-y, average annual inflation of 14%, and an average exchange rate of UAH 41.4:USD, down 12% from the current level. Thus, the government sees 2023 nominal GDP at $189bn, close to the 2021 high of $200bn.

The European Commission confirmed that the EU-administered ban on imports of Ukrainian wheat, corn, rapeseed and sunflower to five member states neighboring Ukraine (Poland, Romania, Slovakia, Hungary and Bulgaria) expired on Sep. 15 and will not be prolonged. Concurrently, Ukraine agreed to introduce measures to prevent any market distortions in the neighboring EU countries. The European Commission undertook to refrain from imposing any restrictions as long as the measures taken by Ukraine are in place and fully working. At the same time, Poland, Hungary and Slovakia said they would impose national bans on imports (not transit) of Ukrainian grain.