Emerging market investors hungry for yield pick-up are likely to find plenty of opportunities in Ukraine over the coming year as local companies take advantage of relatively stable political conditions to access the Eurobond markets in increasing numbers.
Debt bankers say corporate issuance could double from the $2.5 billion raised in 2010 following Viktor Yanukovich’s decisive victory in presidential elections in February. Not only are last year’s successful borrowers – state export bank Ukreximbank, Privatbank, fuel and energy supplier Dtek and its sister mining company Metinvest, and poultry producer MHP – likely to return to the market, but a handful of new names are being tipped to join them.
Indeed, iron-ore producer Ferrexpo, Mriya Agro Holding and fellow agricultural company Kernel Holding were all due to issue debut bonds before the end of 2010 but were deterred by the negative reception of egg producer Avangard’s inaugural $200 million issue at the end of October. That shook investor confidence but analysts insist it was a one-off – blaming variously poor execution, the company’s single rating and the eurozone sovereign debt crisis – and that the effects will not be lasting.
| "There are very few corporates in Ukraine that could issue more than $500 million, so we’re still going to see a lot of deals in the $250 million to $500 million range" Mike Elliff, RBS |
"Unfortunately the Avangard deal has slightly contaminated the rest of the sector but I believe that better-rated Ukrainian corporates will be able to access the market successfully in 2011," says Mike Elliff, head of CEEMEA debt capital markets, commodity and export finance at RBS.
