President Petro Poroshenko is taking on the daunting task of promoting Ukraine to investors even as the country’s conflict with Russia pushes the economy deeper into recession and batters the nation’s currency and bonds.
Poroshenko is scheduled to address via video broadcast an audience including foreign investors and lenders today at the “Invest in Ukraine” forum in London. The event will be the first international conference since Ukraine and the European Union signed an association agreement in June, according to organizer A7 Conferences. Similar meetings are scheduled in Frankfurt this month and New York in November.
Ukraine is seeking to shore up investor confidence as it fights pro-Russian separatists in the country’s industrial east in a conflict that the United Nations estimates has cost at least 2,600 lives. The hryvnia has lost a third of its value against the dollar this year, while government Eurobonds due in 2017 slumped to a 3 1/2-month low. Ukraine may need an additional bailout of about $19 billion if the conflict continues through 2015, the International Monetary Fund said.
“Fixed-income investors still hold significant positions in Ukraine,” Timothy Ash, the chief economist for emerging markets at Standard Bank Group Ltd. in London, said by phone. Ash is speaking at today’s event. “It’s still important for policy makers to continue to engage with investors and be as realistic as possible. Maybe now’s not the time to pull the trigger but eventually there will be opportunities to invest in Ukraine.”
Other speakers at the event include representatives from the European Bank of Reconstruction and Development and the chief executives of Ukrainian companies such as technology outsourcing provider Miratech and investment group Smart-Holding. Aleksandr Pisaruk, the first deputy head of the National Bank of Ukraine, and Kiev Mayor Andriy Sadovyi will speak via video broadcast.
The conference is being held as fighting intensifies in Ukraine’s industrial regions of Donetsk and Luhansk and the government in Kiev accuses Russia of deploying troops to help buoy a five-month insurgency. Russia, which is facing further sanctions from the European Union as early as this week, has repeatedly denied involvement.
Ukraine’s dollar-denominated bonds maturing in July 2017 has slid in the past 10 days, sending the yield up 3.81 percentage points in the longest slump since the securities were sold in 2012. The hryvnia has weakened 34 percent against the dollar this year, the second-worst performer among world currencies.
Ukraine may require additional external financing of about $19 billion by the end of next year if the conflict rages on through 2015, the Washington-based IMF said yesterday. A $17 billion bailout loan the fund approved in May assumes the conflict will ease in the coming months. The country, whose economy is set to contract 5.4 percent this year, has more than $16 billion of principal and interest payments to make before the end of 2015, according to data compiled by Bloomberg.
“There are enough people who view this situation beyond the conflict” as the country is expected to enter a privatization program, Dmitri Petrov, an analyst at Nomura Holdings Inc. in London, said by phone yesterday. “I don’t believe anyone will commit significant capital to Ukraine immediately.”