Ukraine tapped the 10 year Eurobond it sold in November 2012 for a further $1 billion on Monday, bringing the total deal size to $2.25 billion and demonstrating that it is in no rush to do a financing deal with Russia or the IMF.
JP Morgan and VTB Capital were bookrunners on the tap, which generated a book of $1.9 billion.
Ukraine needs to repay about $9 billion of foreign debt this year and is in talks with the International Monetary Fund on a new $15 billion stand-by programme.
The country paid a new issue premium of 25 basis points for the tap, according to an origination official close to the deal, the highest paid so far this year for any CEEEMA issuer.
But it weighed that price against the opportunity of tapping the market at a time when many other issuers are hesitating because of the more volatile market conditions.
In any case, it was still able to lock in a lower yield than its November bond. Price guidance for the tap was initially released at 7.75% area and pricing was at 7.625%.
The original note placed in November note was priced at par to yield 7.8%. And its $2 billion bond market return in July — after an absence of about a year — priced at 9.25% for a five year maturity.
“The new issue premium on this week's deal looked quite generous but Ukraine was right in looking at it as still representing a decline in their borrowing costs,” said the origination official close to the deal.
“The first deal they priced last year had a 9% handle for a shorter maturity, so it’s still a dramatic improvement.” The new issue premium in this week’s tap also took into account a spike in US Treasury rates over the last few weeks. Both the November deal and Monday’s bond were priced with a spread of 565bp over US Treasuries.
The tap was priced at 101.175 and was trading at 101.16 on Tuesday morning.
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