June 27 (Bloomberg) -- Ukraine’s government will sell $1 billion of Eurobonds next month to refinance part of a loan from VTB Group, the head of Russia’s second-biggest lender said.
The Eurobonds will probably be issued for two years and will carry a “market” interest rate, VTB’s Chief Executive Officer Andrei Kostin told reporters today in Ukraine’s capital, Kiev.
The former Soviet republic received a $2 billion six-month loan from VTB in 2010 and extended it three times. The loan had an interest rate of 6.7 percent and was used to help cover the budget gap, which the Cabinet wants to keep within 1.7 percent of economic output this year.
The government repaid $1 billion to VTB this month, Kostin said.
Ukraine plans to issue securities with an annual coupon of 7.95 percent this month, First Deputy Finance Minister Anatoliy Myarkovskyi said June 5. The yield on Ukrainian government bonds due 2013 fell to 9.5129, the lowest since May 22, as of 7:30 p.m. in Kiev, data compiled by Bloomberg show.
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