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UPDATE 1-Ukraine hopes to issue $1.1 bln in Eurobonds in '10

Published 09/16/2009, 11:03 AM
Updated 09/16/2009, 11:06 AM

(Adds details, analyst)

KIEV, Sept 16 (Reuters) - Ukraine plans to issue Eurobonds worth about $1.1 billion next year -- the first such issue since 2007 if it succeeds -- according to the government's budget draft papers posted on the parliament's Web Site on Wednesday.

Ukraine has been unable to issue Eurobonds in the past two years as the global financial crisis brought lending to a virtual standstill and dampened appetite for investing in risky countries.

It had planned issues of $2 billion this year and $1.67 billion last year, according to previous budgets and the hryvnia currency rates at the time. Next year's Eurobond figure of 8.125 billion hryvnias was set at an exchange rate of 7.5/$.

The ex-Soviet state has been surviving on a $16.4 billion lifeline from the International Monetary Fund, a programme agreed on last November but coming to an end after the first quarter of next year.

Analysts said Kiev, its image abroad battered by political rowing and tense relations with Russia, must tread carefully in how it tries to restructure a $500 million Eurobond of state energy firm Naftogaz, if it wants to borrow next year.

"It will be very difficult for them to raise any money from international capital markets in 2010 unless they resolve the outstanding issues over Naftogaz," said Tim Ash, head of CEEMEA Research at RBS.

Acting Finance Minister Ihor Umansky said earlier he thought restructuring the bond would help Ukraine's and Naftogaz' credit ratings, thus paving the way for more borrowing. (Reporting by Sabina Zawadzki; Editing by Ron Askew)

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