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BofA downgrades its recommendation for Ukrainian eurobonds from OW to MW

KYIV. Sept 24 (Interfax-Ukraine) – Analysts at Bank of America Corp. (BofA) have downgraded its recommendation on Ukraine’s eurobonds to Marketweight (MW) from Overweight (OW).

The recommendation is contained in the forecast and strategy for emerging markets released on September 24.

In addition, the analysts downgraded the fair value of Ukraine’s VRI by 10 points, to 96, which is significantly lower than current market estimates, and also view a full redemption of VRI as the best solution from the point of view of the authorities, since this will remove any uncertainty about future payments and any potential incentive constraints in the reported statistics.

BofA also predicts that it would be difficult for Ukraine’s annual GDP growth to approach even the conservative target of 3.5% due to the slowdown in economic recovery year-over-year, caused by a sharp change in the base effect in the second half of 2021.

According to the forecast, Ukraine will reach the staff level agreement in the next few weeks after the last IMF mission. At the same time, according to BofA estimates, the actual provision of the tranche may still require revision of the legislative framework on NABU.