It is reported that Ukraine Cabinet of Ministers suspended the upcoming USD 500 million Eurobond issue.

According to the Cabinet, this was because there were sufficient funds in the State Budget account to cover planned government spending. It is worth noting that the State Budget 2008 foresees external borrowing of USD 1.7 billion which has not started yet.

According to Millennium capital analyst, “We consider the news to be positive, as additional government borrowing might lead to a new inflation impulse related to the extra money influx in the form of government spending. At the same time the Eurobond issue delay was related to the downgrading of Ukraine’s Sovereign Rating by S&P and the high EMBI spread of the government Eurobonds. Still, we expect that the government will issue the Eurobonds by the end of 2008, as soon as both inflation and the EMBI spread are lowered.”

(Sourced from Millennium capital)