ukraine | fixed income december 2010data.cbonds.info/bondcongress/ua-market-2010/...c c c 200 400...

Еволюція ринку облігацій: апетит до ризику росте.

Ukraine | Fixed income December 2010

Андрій Герус, Конкорд Капітал

CDS down, ratings up

Ukraine Fixed Income December 2010

Sovereign CDS, 5Y USD, bps

Source: Bloomberg, Moody’s, S&P, Fitch

Ukraine’s sovereign ratings, outlooks

Moody’s S&P Fitch

Aaa AAA AAA

Aa AA AA

A A A

Baa BBB BBB

Ba BB BB

B1 B+

(Stable) B+

B2

(Stable) B

B

(Stable)

B3 B- B

Caa CCC CCC

Ca CC CC

C C C

0

200

400

600

800

1000

Jan-10 Feb-10 Apr-10 May-10 Jul-10 Aug-10 Oct-10 Nov-10

Ukraine

Greece

Ireland

Russia

IMF deal boosts CB reserves, sovereign ratings


Source: IMF, Moody’s, S&P, Fitch, NBU, Concorde capital estimates

IMF disbursements to the central bank and gov’t, USD bln NBU reserves cover 89% of S-T external debt, USD mln

0

10

20

30

40

50

2004 2005 2006 2007 2008 2009 2010F

Other DebtBanks DebtState DebtReserves

76%

94%

84%

86%

69%

71% 89%

Reserves/

ST Ext debt

Dec 2010

28/7/10

0.0

0.5

1.0

1.5

2.0

To Gov't To NBU

2011 2012


Real growth 4.4%, inflation 10.5% in 2010E

Inflation expected to be 10.5% in 2010, down from 12.3% in 2009

Source: State Statistics Committee of Ukraine

Real growth stable over 2010

-60%

-40%

-20%

0%

20%

40%

Jan-

08

Apr-

08

Jul-

08

Oct-

08

Jan-

09

Apr-

09

Jul-

09

Oct-

09

Jan-

10

Apr-

10

Jul-

10

Oct-

10

GDPIndustrial productionMetallurgy

-10%

0%

10%

20%

30%

40%

50%

Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10

CPI

PPI

Public debt size is in check, cost declines


Public debt size expected to be manageable 40% of GDP in 2010

Source: State Statistics Committee of Ukraine, National Bank of Ukraine, IMF, Finance Ministry, Bloomberg, Concorde Capital estimates

Cost of public debt declines in 2010, %

34.8%

37.5%

66.1%

40.0%

37.2%

69.3%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Ukraine

Emerging markets

World

2010E2009

Public debt, % of GDP

0

5

10

15

20

25

Jan-10 Feb-10 Apr-10 May-10 Jun-10 Jul-10 Sep-10 Oct-10 Nov-10

UAH debt (primary auctions avg. yield)

USD debt (Ukraine'12 Eurobonds YTM)


USD/UAH stable and BoP improves in 2010

BoP: strong capital inflow (% of GDP)

Source: National Bank of Ukraine, UkrDealing, Concorde Capital estimates

USD/UAH stays stable

7

8

9

10

11

12

13

May-09 Jul-09 Sep-09 Nov-09 Feb-10 Apr-10 Jun-10 Aug-10 Nov-10

USD/UAH

EUR/UAH

-15%

-10%

-5%

0%

5%

10%

15%

2007 2008 2009 2010E 2011F

Current account balanceCapital account balanceOverall balance of payments

Equity market grows, remains volatile


UX vs. global index performance, January 2008 to present

Source: UX, Bloomberg

0%

20%

40%

60%

80%

100%

120%

Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10

UX RTS MSCI EM MSCI CEE + CIS S&P 500

Banking sector liquidity went down


Source: UX, PFTS, Bloomberg

Page 8

0

5

10

15

20

25

30

35

40

45

50

Jan-10 Feb-10 Mar-10 May-10 Jun-10 Jul -10 Sep-10 Oct-10 Nov-10

CDs of NBU outstanding

Banking liquidity, UAH bln

Banks ' corr. accounts

OVDP Holders: foreigners are back


Source: NBU

Page 9

0

20

40

60

80

100

120

140

4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q09 2Q09 3Q09 11M10

Foreign Investors

Other domesticLocal Banks

NBU

UAH bln

Buy VAT-bonds, Sell OVGZ

Ukraine Equity Fixed Income September 2010


Due to the political stability, export recovery and IMF support , OVGZ yields decreased by 12-14 p.p. YTD • 2.5-year OVGZ trade with 12.5-13% YTM • 2.2-year VAT-bonds trade with 15%-15.5% YTM

We estimate the yield for both OVGZ and VAT-bonds will be around 13,5%-14% by the end of the year

Due to large amounts of issuances and popularity among the investors, the VAT-bonds are likely to enjoy high liquidity

Recommendation as of September 2010

The forthcoming corporate bonds placement



Issuer Maturity/put

option Amount, UAH Coupon, %

Akta Bank 1 year 50 000 000 18,0

Avers 1 year 100 000 000 n/a

Credit Agricol 1 year 500 000 000 10,0

Sberbank n/a 750 000 000 n/a

Stalkanat-Silur n/a 100 000 000 n/a

Other 1 500 000 000

Total 3 000 000 000



Thank you for attention

Contacts CONCORDE CAPITAL

2 Mechnikova Street, 16th Floor, Parus Business Centre, Kyiv 01601, Ukraine

Tel.: +380 44 391 5577 | Fax: +38 044 391 5571 | www.concorde.ua

CEO Igor Mazepa | [email protected]

SALES

International Sales & Trading

Anastasiya Nazarenko | [email protected] Marina Martirosyan | [email protected] Rostyslav Shmanenko | [email protected]

Marina Damaskina | [email protected] Anton Artamonov | [email protected] Dasha Vasilieva | [email protected]

Domestic Sales & Trading

Yuriy Pilipenko | [email protected] Alisa Tikhomirova | [email protected]

Director of Domestic Fixed Income Roland Vizner | [email protected]

RESEARCH

Director of Investment Research Rebecca Baldridge, CFA | [email protected]

Metals & Mining Andriy Gerus | [email protected]

Utilities, Machinery Yegor Samusenko | [email protected]

Oil & Gas Andriy Gerus | [email protected] Ruslan Patlavskyy | [email protected]

Agriculture, Consumer Goods Ruslan Patlavskyy | [email protected]

Economics, Financial Services Mykyta Mykhaylychenko | [email protected]

Fixed Income Andriy Gerus | [email protected] Mykyta Mykhaylychenko | [email protected]

Politics, Editing Brad Wells | [email protected]

Ukraine Fixed Income September 2010

DISCLAIMER

THIS REPORT HAS BEEN PREPARED BY CONCORDE CAPITAL INVESTMENT BANK INDEPENDENTLY OF THE RESPECTIVE COMPANIES MENTIONED HEREIN FOR INFORMATIONAL PURPOSES ONLY. CONCORDE CAPITAL DOES AND SEEKS TO DO BUSINESS WITH COMPANIES COVERED IN ITS RESEARCH REPORTS. AS A RESULT, INVESTORS SHOULD BE AWARE THAT CONCORDE CAPITAL MIGHT HAVE A CONFLICT OF INTEREST THAT COULD AFFECT THE OBJECTIVITY OF THIS REPORT. THE INFORMATION GIVEN AND OPINIONS EXPRESSED IN THIS DOCUMENT ARE SOLELY THOSE OF CONCORDE CAPITAL AS PART OF ITS INTERNAL RESEARCH COVERAGE. THIS DOCUMENT DOES NOT CONSTITUTE OR CONTAIN AN OFFER OF OR AN INVITATION TO SUBSCRIBE FOR OR ACQUIRE ANY SECURITIES. THIS DOCUMENT IS CONFIDENTIAL TO CLIENTS OF CONCORDE CAPITAL AND IS NOT TO BE REPRODUCED OR DISTRIBUTED OR GIVEN TO ANY OTHER PERSON. CONCORDE CAPITAL, ITS DIRECTORS AND EMPLOYEES OR CLIENTS MIGHT HAVE OR HAVE HAD INTERESTS OR LONG/SHORT POSITIONS IN THE SECURITIES REFERRED TO HEREIN, AND MIGHT AT ANY TIME MAKE PURCHASES AND/OR SALES IN THEM AS A PRINCIPAL OR AN AGENT. CONCORDE CAPITAL MIGHT ACT OR HAS ACTED AS A MARKET-MAKER IN THE SECURITIES DISCUSSED IN THIS REPORT. THE RESEARCH ANALYSTS AND/OR CORPORATE BANKING ASSOCIATES PRINCIPALLY RESPONSIBLE FOR THE PREPARATION OF THIS REPORT RECEIVE COMPENSATION BASED UPON VARIOUS FACTORS, INCLUDING QUALITY OF RESEARCH, INVESTOR/CLIENT FEEDBACK, STOCK PICKING, COMPETITIVE FACTORS, FIRM REVENUES AND INVESTMENT BANKING REVENUES. PRICES OF LISTED SECURITIES REFERRED TO IN THIS REPORT ARE DENOTED IN THE CURRENCY OF THE RESPECTIVE EXCHANGES. INVESTORS IN FINANCIAL INSTRUMENTS SUCH AS DEPOSITORY RECEIPTS, THE VALUES OR PRICES OF WHICH ARE INFLUENCED BY CURRENCY VOLATILITY, EFFECTIVELY ASSUME CURRENCY RISK. DUE TO THE TIMELY NATURE OF THIS REPORT, THE INFORMATION CONTAINED MIGHT NOT HAVE BEEN VERIFIED AND IS BASED ON THE OPINION OF THE ANALYST. WE DO NOT PURPORT THIS DOCUMENT TO BE ENTIRELY ACCURATE AND DO NOT GUARANTEE IT TO BE A COMPLETE STATEMENT OR SUMMARY OF AVAILABLE DATA. ANY OPINIONS EXPRESSED HEREIN ARE STATEMENTS OF OUR JUDGMENTS AS OF THE DATE OF PUBLICATION AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART WITHOUT PRIOR PERMISSION IS PROHIBITED. NEITHER THIS DOCUMENT NOR ANY COPY HEREOF MAY BE TAKEN OR TRANSMITTED INTO THE UNITED STATES OR DISTRIBUTED IN THE UNITED STATES OR TO ANY U.S. PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)), OTHER THAN TO A LIMITED NUMBER OF “QUALIFIED INSTITUTIONAL BUYERS” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) SELECTED BY CONCORDE CAPITAL. THIS DOCUMENT MAY ONLY BE DELIVERED WITHIN THE UNITED KINGDOM TO PERSONS WHO ARE AUTHORIZED OR EXEMPT WITHIN THE MEANING OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (“FSMA”) OR TO PERSONS WHO ARE OTHERWISE ENTITLED TO RECEIVE THIS DOCUMENT UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, OR ANY OTHER ORDER MADE UNDER THE FSMA. ©2010 CONCORDE CAPITAL

ukraine | fixed income december 2010data.cbonds.info/bondcongress/ua-market-2010/...c c c 200 400...

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