KYIV - EVENT: Ukrainian state enterprise Financing of Infrastructural Projects (UKRINF), a government SPV engaged in attracting financing for projects related to hosting the EURO 2012 football championship, will manage its upcoming $690 mln Eurobonds sale through Morgan Stanley. Costs of the issue for UKRINF will amount to $3.8 mln or 0.55% of the principal. The issue will have a state-guarantee for the equivalent of UAH 5.5 bln.

IMPACT: The news is negative for UKRINF.

RATIONALE: The state enterprise issued $568 mln in Eurobonds back in November 2010 priced at 8.1%. Currently, these notes trade with a 40 bps spread to Ukraine’s sovereign yield curve compared to nearly 100 bps in the first weeks after the placement. UKRINF’s new placement could potentially have a short-term negative effect on its outstanding notes. The new Eurobonds could pay a spread of 60-80 bps to sovereigns, which may lead to a decrease in demand for the six-year issue.


NOTE:  Phoenix Capital is a member of the U.S.-Ukraine Business Council (USUBC), Wash, D.C.,