The Business Week for the week of March 2 – 8, 2020

The Business Week for the week of March 2 – 8, 2020


A leading U.S. credit rating agency, Fitch Ratings, has affirmed Ukraine’s long-term foreign- and local-currency Issuer Default Ratings (IDR) at ‘B’, according to the rating’s most recent report. “Ukraine has made significant progress in obtaining legislative approval for a series of reforms…” reads the report. Key rating drivers include improved policy consistency, credibility and multilateral support. Fitch expects Ukraine to continue its cooperation with the IMF, a relationship that will help support a sustained reduction in refinancing risks and additional external financing. Fitch is one of the Big Three credit rating agencies that have a strong impact on the perception of the country’s economic prospects for international investors.

Ukraine’s international reserves up by $300 million in February

As of March 1, Ukraine’s international reserves reached $26.6 billion, according to a report by the National Bank of Ukraine. Last month, the international reserves increased by 1.3%, or $300 million, primarily because of persisting favorable conditions on the FX market. The changes in international reserves in February were due to various factors, such as sustained proceeds from exports and lower demand on foreign currency from importers, as the warm winter pushed down prices and demand for energy, according to the report.

Ukraine’s Finance Ministry sells UAH 6.6 in euro-denominated bonds

The Finance Ministry of Ukraine sold bonds at the equivalent of UAH 6.6 billion ($268 million) at auction on March 3, according to the ministry’s Facebook page. The biggest chunk was made up of 9-month eurobonds, as €201 million were sold at 2.22%. The remaining were six-month hryvnia bonds sold for UAH 1.03 billion ($42 million) at 9.9%. “Despite the turbulence in the capital markets because of changes in investor sentiment, the Ministry of Finance continues to successfully execute the state budget financing plan,” the Ministry reports.


Ukraine and France sign agreement on drinking water supply project

Ukraine and France have signed an agreement on a drinking water supply project in Mariupol in which the French government will loan up to €64 million to Ukraine through Natixis, a French corporate and investment bank. There is a 10-year grace period for the loan followed by a 0.08% annual interest rate. The overall loan term is 30 years. Mariupol, a port city with a population of 450,000 people in southeast Ukraine, has been a major industrial city that has been gaining strong interest from investors in recent years. In turn, France has been one of Ukraine’s most committed trade partners as more French companies enter the Ukrainian market. Brands such as Danone, Decathlon, Leroy Merlin, Renault, Auchan, Ukrsibbank and Credit Agricole have been doing business in Ukraine.


Ukraine’s government transfers 431 state enterprises for privatization

The Cabinet of Ministers of Ukraine has transferred a record number of 431 state-owned enterprises to the State Property Fund for privatization. So far, the government has already transferred 961 objects within 6 months, which is 10 times more than 10 years earlier. In addition, the government transferred 4 objects for large-scale privatization: JSC Bolshevik Plant, JSC “State Food and Grain Corporation of Ukraine”, SJSC “Bread of Ukraine” and SE “Artyomsol of Ukraine”. Enterprises will be restructured and prepared for transparent auctions with the involvement of private investors. Ukraine’s government has been preparing hundreds of state-owned enterprises for privatization since 2014 as the country has around 3,000 state-owned enterprises, most of which are loss-making and non-strategic.


Lviv’s airport passenger flow for the last two months up by 29% y-o-y

Lviv’s Danylo Halytskyi International Airport passenger flow for January and February reached 303,200 people, which is 29.4% more compared to the same period of last year, according to the airport’s Facebook page. Most of the passenger traffic was for international flights (265,500 passengers). In February alone, the airport handled 140,300 passengers and 1,226 flights, or 17.5% more flights year-over-year. Just recently, Lviv’s international airport increased its passenger handling capacity by 50% to 3,000 passengers an hour as it is preparing for the inflow of tourists during the summer. The city is growing as a major tourist and economic hub in the region considering its close proximity to the European Union.

Ukravtodor signs bridge construction contract with Onur Taahhut

Ukravtodor, Ukraine’s state roads agency, signed a contract with Turkish company Onur Taahhut for the construction of a bridge in the city of Zaporizhia. The agreement term is for four years but the state agency says that the bridge project will most likely be complete in two years. Onur Taahhut has agreed to complete the project for UAH 12 billion. So far, Ukravtodor allocated UAH 1.25 billion for the construction of the bridge. The Turkish company has been operating in Ukraine for over 15 years doing infrastructure projects all over the country. As Ukraine continues to reform its roads sector and as more money is pumped into Ukraine’s highways, more international companies are expected to participate in tenders.


Vodafone Ukraine and Vodafone Group sign strategic partnership agreement

Two separate companies, Vodafone Ukraine and Vodafone Group, have signed a strategic partnership agreement on March 3 that will enhance Ukraine’s digital transformation. The agreement will allow Vodafone Ukraine to keep operating under the British Vodafone brand over the next five years, have access to Vodafone’s international expertise in the fields of digital transformation, the internet of things, 5G-based services and international audits for the network. This includes ongoing support for Vodafone Ukraine’s recently launched IoT managed connectivity service, which leverages Vodafone Group’s world-leading IoT platform. Vodafone is one of the world’s biggest telecommunication companies that provides a wide range of services. In December 2019, Azerbaijani NEQSOL Holding acquired 100% shares of Vodafone Ukraine, the second telecommunications operator in the Ukrainian market. Ukraine has the world’s second cheapest internet, according to the Worldwide Price Comparison study.


Sales of new cars in Ukraine up by 21% in February

Ukraine’s automobile market continues to grow as the sale of new cars almost reached 7,000 units, or a 21% increase compared to the same period of last year, according to the Ukrainian Motor Vehicle Manufacturers Association. The biggest seller was French Renault as it sold 1,223 new cars, up by 68% year-over-year. The second most successful seller was Japanese Toyota, reaching 1,089 cars in sales, a 52% increase year-over-year. South Korean KIA took third place as it sold 478 cars in Ukraine, a 20% increase compared to last year’s month of February. Other top sellers include Skoda and Nissan. Ukraine’s car market is expected to continue to flourish as the purchasing power of Ukrainians continues to grow.