FOREIGN INVESTORS CONTINUE TO EXPRESS INTEREST IN UKRAINIAN CAPITAL MARKETS DESPITE PANDEMIC INDUCED FRAGILITIES IN THE ECONOMY

Speakers at ICU’s virtual Ukrainian Fixed Income Conference 2020 showed confidence in the future of Ukrainian capital markets as the sector has shown constructive growth despite a difficult year caused by the Covid-19 pandemic. Positive policy changes from the National Bank of Ukraine and activity from the Ministry of Finance gives cause for investor confidence in Ukrainian capital markets. This coupled with domestic banks taking a leading role in the purchasing of local bonds indicates a further strengthening of the asset class. Speakers were also assured by how Ukraine was able to bounce back its economy better than initially anticipated.

Last Friday ICU hosted a conference of high-profile speakers from across the Ukrainian government and the National Bank of Ukraine discussing the recent developments to the country’s capital markets and main economic challenges for Ukraine. Sergii Marchenko, Minister of Finance of Ukraine and Yuriy Butsa, Government Commissioner for Public Debt Management were joined by Kateryna Rozhkova, First Deputy Governor of the National Bank of Ukraine and ICU’s Head of Macroeconomic Research Sergiy Nikolaychuk, to discuss international capital markets, NBU policy and Ukrainian currency markets.

Konstantin Stetsenko, Founding Partner at ICU commented:
“It’s vital for Ukraine’s economy to keep up the reform process in order to attract more international investors and continue our cooperation with the IMF while also managing the economic impact of the crisis, by supporting households and businesses and it’s a fine balancing act. Economic stability is key to rebuilding investor confidence.”

Yuriy Butsa, Government Commissioner for Public Debt Management:
“Low inflation in Ukraine together with relatively high real rates helps to maintain interest to our local currency market. Today we have a renewed interest to longer papers. This week for the first time in couple of months we had more than USD 200 million demand for 3-year paper with the yield of 10.46%. We aim to continue offering to the market the instruments in this part of the curve, as we believe it’s a sweet spot where both local and international players can participate and have sufficient liquidity on the secondary market.”

Kateryna Rozhkova, First Deputy Governor of the National Bank of Ukraine:
“The Ukrainian economy has entered the global economic crisis caused by the coronavirus pandemic with a greater margin of safety than during the crises in 2008 and 2014. The National Bank took effective measures to support the economy and the banking sector in a timely manner. To resume economic growth in 2021 by 4%, it is extremely important to continue cooperation with the International Monetary Fund and international partners. A key risk to macro-financial stability remains the potential longer duration and deepening of the coronavirus pandemic with further quarantine measures.”

Commenting on the economic outlook, Sergiy Nikolaychuk, Head of Macroeconomic Research, ICU:
“Ukraine has been able to weather the the global crisis quite well due to its structural features and macro-financial stabilization accomplished in previous years. Ukraine is set for a fast rebound, however, there are some fragilities to this recovery as well as a number of opportunities lost.”