OPIC reopens programs in Ukraine

Paving the way for millions of dollars in potential U.S. private sector investment in the country, the Overseas Private Investment Corporation (OPIC) has restored its programs in Ukraine, following the signing on December 16 of an agreement resolving a dispute over an insurance claim paid by OPIC.

By virtue of the agreement, OPIC is now able to provide financing and political risk insurance to American companies investing in Ukraine.  Previously, OPIC had provided more than $254 million in financing and insurance to 21 projects in Ukraine, in sectors ranging from manufacturing and construction to energy and financial services.

“OPIC is pleased to once again make available its support for U.S. investment in Ukraine, a development which we anticipate will send a highly positive signal to prospective investors in the country,” said OPIC Acting President Dr. Lawrence Spinelli.

Consessions may be simplified in Ukraine

Ukrainian parliament supported amendments to the law on Concessions (#4674), which will make concessions more operable in Ukraine. As of now it is much simpler to work on contracts of rent. Few consession projects that have been started so far did not succeed. Public-private partnership projects in the country are stalled by inefficient consession law. The new law if adopted will make consessions more attractive to investors. However, it is unlikely that consessions will start working in Ukraine any time soon, at least not for a couple of years. It is likely that the parliament will get re-elected in Autumn 2010 and the law on consessions will have to be considered by the new parliament, which will bring significant delay in making that mechanism work.

IMF to pay wages and pensions?

Kommersant Ukraine newspaper sources tells that although IMF will not issue next tranche to Ukraine prior to presidential elections there might a compromise of another nature with Ukrainian authorities. The money that IMF has already transferend to National Bank of Ukraine may be transfered to the government to finance the budget deficit. The last tranche from IMF in that way will be redistributed to pay for wages of state employees as well as other social payments from the budget instead of being used for support of the financial sector.

Ukraine's debts - main risk of 2010

Ukraine's obligations both government and corporate on short-term debts in 2010 is about $20 bn. Same obligations on long-term debts in 2010 is $10 bn. Therefore, overall Ukraine should pay off $30 bn in 2010. Thus the magnitude of default in the country totally lies with creditors. In their turn creditors will assess the situation in Ukraine depending on the power change in the country. Ukraine's presidential elections will slowly move into local elections and then there is a risk of Autumn re-election of the parliament. Therefore, 2010 promises to be a difficult year for Ukraine both politically and financially. Source.

Ukraine's probability of default on sovereign debt accoring to CMA Datavision is lower only to Venezuala, and both countries have probabilities of default above 50%. Source.

Russia and EBRD - biggest investors in Ukraine in 2009?

According to Delo Vneshekonombank whose board is chaired by Mr. Vladimir Putin, made the largest investment into financial sector of Ukraine buying Prominvestbank for about $200 mln and augmenting its capital by UAH 4 bn. EBRD in 2009 made a record in financing investment project portfolio worth EUR 1,1 bn, including investments into financial sector. Source.

Fitch downgrades Interpipe rating to Restricted Default

Fitch downgraded Interpipe Limited long-term default rating to ‘RD’ on Dec 18. Lowered ratings of the company are due to lack of understanding between the company and creditors as well as with Eurobond holders ($200 millions outstanding).

Fitch sees a considerable risk that Interpipe can default on paying back the loans once the period of extension agreed with the creditors runs out. Further postponement of payments should be agreed upon in January 2010 and Fitch expects these negotiations to be difficult.

Overall Interpipe owes $900 million at the end of the III quarter 2009. In September it was announced that Interpipe will seek additional financing from Barclays Capital and Citigroup Inc., which arranged the loan for the company in May 2008.

Earlier this year it was reported that Ukrainian billionaire Viktor Pinchuk wants to sell shares of Interpipe Ltd. in an IPO by the end of 2011.

Ukraine's stocks pay off 900% over a decade

Ukraine -- in spite of the fractiousness of its political elite in recent years -- that offered an unbeatable return of nearly 900 percent over the decade, data compiled by Reuters show.

Along with Peru and Sri Lanka, Ukraine was also among the top 10 performing stock markets in 2009, a year that saw emerging equities. Ukraine's PFTS Index .PFTSI managed to double in dollar value in 2009 despite the economy's dependence on a $16.4 billion bailout programme from the International Monetary Fund.

Over the decade, the market capitalisation of the Ukrainian bourse has increased tenfold to $26 billion, fuelled by large-scale privatisation of state assets and the explosion of new securities sales. Source.