Ukraine has raised $3 billion in its first sovereign bond issue since the country's 2014 revolution, a source close to the deal said on Monday.

The proceeds from the 15-year eurobond sale overshot the treasury's initial target of $2.5 billion, with the funds earmarked for debt servicing, the source told AFP.

President Petro Poroshenko, on a visit to the United States, saluted the news in a video to his Facebook page as "proof that the whole world is voting, with its money, for Ukraine and for the effectiveness of our reforms."

The country had been unable to tap the international bond market since upheaval and military conflict three years ago, leading to a major restructuring of its outstanding debt in 2015.

Most creditors accepted to grant Ukraine debt relief at the time, but not Russia.

Since then, Kiev has been struggling to recover from a devastating economic crisis as the Russian-backed insurgency in its industrial east helps gut its fragile finances.

 

Monday's issue sees a 1.7 billion tranche attracting a 7.375 percent interest rate over 15 years -- more competitive than that attached to the 2015 restructuring deal which helped to slice a fifth off Ukrainian private debt.

The country's return to the debt market "is symbolic" as in 2014 "it was difficult to imagine that we would be able to borrow money on the financial markets with a normal interest rate," Finance Minister Olaksandr Danylyuk told AFP ahead of Monday's news.

In earmarking the money for servicing major debt obligations in 2019 and 2020 "we are considerably reducing the risk of future refinancing" which "will have a positive impact on our position with ratings agencies," Danyliuk added.

The International Monetary Fund has stepped in with some help, but Ukraine has so far received only $1 billion of the $4.5 billion it hopes to see arrive from the IMF this year.

Analysts say Ukraine needed to return to the debt markets if it were to meet its upcoming debt repayment obligations.

They said Kiev has picked a favourable time to sell bonds because investor appetite for higher-risk assets is growing.

International agencies Moody's and Standard and Poor's both rate Ukraine's credit quality below investment grade, making Kiev a "junk bond" issuer.

source: AFP