Medium-term Strategy for the State Debt Management for 2019-2020

1. June 2019 1
Medium-Term State Debt
Management Strategy
for 2019 – 2022
June 2019

2. June 2019 2
Ukraine’s state debt, USDbn
Ukraine’s state debt dynamics
11,2
17,0
22,8 24,5 26,1 27,9 30,8 34,4 36,0 38,5 39,7
5,8
11,4
17,8 20,2
23,8
32,1 29,2 21,2
24,7
26,8
27,5
17,0
28,4
40,6
44,7
49,9
60,1 60,1
55,6
60,7
65,3 67,2
13,8%
24,9% 30,0% 27,5% 28,4%
32,8%
59,7%
67,1%
69,2%
61,5%
52,3%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
State external debt State domestic debt State debt to GDP, %
 Ukraine’s state debt (as of 31.12.2018):
USD 67.2bn
● State domestic debt: 40.9%
● State external debt: 59.1%

3. June 2019 3
Ukraine’s state and state-guaranteed debt, USD bn
Ukraine’s state and state-guaranteed debt dynamics
18,5
26,6
34,8 37,5 38,7 37,6 38,8 43,4 45,6 49,0 50,5
6,1
13,2
19,5
21,7 25,8
35,5 31,0 22,1
25,4
27,3
27,9
24,6
39,8
54,3
59,2
64,5
73,2
69,8
65,5
71,0
76,3 78,3
20,0%
34,8% 40,1%
36,4% 36,7%
39,9%
69,4%
79,1%
80,9%
71,8%
60,9%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total external debt Total domestic debt Total debt to GDP, %
 Ukraine’s state and state-guaranteed
debt (as of 31.12.2018): USD 78.3bn
● State domestic debt: 35.6%
● State external debt: 64.4%

4. June 2019 4
 13 issues worth USD 15.0bn restructured
 Debt principal amount reduced by 20%
 Maturity postponed from 2015–2018 to 2019–2027
Key achievements during 2015–2019
Successful debt
management
operation
2015
2017
2018
2019
Return to
international
capital market
and re-profiling
Strengthening
investor
relations and a
new Eurobond
issuance
Link with
Clearstream and
rapid domestic
government
bond
development
Target debt
level in 2020
71%
57%
 The first in the history of Ukraine 15-year Eurobond issuance
amounting to USD 3.0bn and active external debt management
operation for a total of USD 1.7bn
 Re-profiling: NBU-owned domestic government bonds for a total
amount of UAH 219.6bn exchanged for long-term government bonds
with a smooth repayment profile
 According to 2018 rating of the Institute of International Finance (IIF),
Ukraine led the ranking of countries that have improved the investor
relations and data transparency indicators the most
 Placement of 5- and 10-year Eurobonds for a total amount of
USD 2.0bn
 The first in the history of Ukraine link with the international
depository was launched
 Domestic government bonds for a total of USD 5.8bn placed since the
beginning of 2019 demonstrating 2.3 times y-o-y growth
 Amount of domestic government bonds held by non-residents has
increased more than 5 times (from USD 229m to USD 1.6bn since the
beginning of 2019)
60%
65%

5. June 2019 5
60,9%
52,3%
57,0%
84,4%
52,8%
Ukraine (Total public
debt)
Ukraine (State debt) Regional peers Rating peers Peers - Regional
leaders
Note 1 Total public debt includes state and state-guaranteed debt
Note 2 As of end of 2018
Ukraine’s total public debt as % of GDP vs. peer countries1,2, %
 State debt as % of GDP decreased to 52.3% as of end of 2018
Ukraine’s state debt overview (1/5)
50.6%
Avg. debt level in
emerging countries

6. June 2019 6
40,9%
53,4%
44,3%
62,3%
59,1%
46,6%
55,7%
37,7%
Ukraine Regional peers Rating peers Peers - Regional leaders
State domestic debt State external debt
Note As of end of 2018
Ukraine’s state debt structure vs. peer countries, %
 Ukraine’s State debt structure displays a somewhat higher share of external debt
compared to peer countries
● Hence, Ukraine is more vulnerable to external shocks
Ukraine’s state debt overview (2/5)

7. June 2019 7
 Concessional funding within Ukraine’s State debt structure accounts for 25% which
demonstrates strong support of Ukraine by international partners
UAH bn USD bn % of total
Market financing 1.394.5 50.4 75.0%
Concessional financing 466.0 16.8 25.0%
IMF 142.8 5/2 7.7%
IBRD (World Bank) 135.5 4.9 7.3%
EU (MFA) 105.0 3.8 5.6%
EBRD 16.0 0.6 0.9%
EIB 18.8 0.7 1.0%
Bilateral loans 47.9 1.7 2.6%
Total state debt 1,860.3 67.2 100.0%
Ukraine’s state debt split by funding sourcesUkraine’s state debt structure, %
USD
67.2bn
Ukraine’s state debt overview (3/5)
IFIs
Eurobonds
Other external
debt
Domestic in
UAH
Domestic in FX
33%
8%
22%
33%
3%

8. June 2019 8
 Significant share of state debt is denominated in foreign currencies (particularly, in USD)
which demonstrates that Ukraine is exposed to FX shocks
 Debt instruments with fixed interest rates account for 75% of total state debt which is
in line with peer countries’ level
● Relatively large share of debt instruments with fixed interest rates (75%) reduces
interest rate risk to acceptable level
State debt split by interest rate type %State debt split by currency, %
UAH
33%
USD
48%
EUR
9%
XDR
8%
JPY
1%
CAD
0,4%
Ukraine’s state debt overview (4/5)
75% 80% 73%
89%
25% 20% 27%
11%
Ukraine Regional peers Rating peers Peers -
Regional
leaders
Fixed rate Variable rate

9. June 2019 9
State debt split by maturity, %Weighted average time to maturity (years)
 Total state domestic debt matures on average in 10.0 years, while state external debt
average time to maturity stands at 8.1 years
Ukraine’s state debt overview (5/5)
10,0
8,1
8,9
State domestic debt
State external debt
Total state debt
31,6%
20,9% 25,3%
4,8%
7,8%
6,6%
17,1% 28,9% 24,1%
46,4% 42,4% 44,0%
State domestic
debt
State external debt Total state debt
<3 y 3-5 y 5-10 y >10 y

10. June 2019 10
Increase of share
of UAH-
denominated debt
1
Smooth debt
repayment profile
with extended
average maturity
Attracting long-
term concessional
funding
Development of
systematic
investor relations
2 3 4
Key objectives of Ukraine’s state debt management
Limits of State debt to GDP (according to the Budget Declaration)
52.0% 47.5% 45.5%
2019 2020 2021
43.0%
2022

11. June 2019 11
Refinancing risk
1
Liquidity risk
2
FX risk
3
Interest rate risk
4
► Development of domestic government bond market
► Performing further active liability management operations (subject to
favorable market conditions)
► Continued cooperation with the IMF
► Financial support within cooperation with other IFIs and foreign
governments
► Increase in share of UAH-denominated domestic debt
► Introduction of FX hedging instruments
► Keeping a limited share of state debt with variable interest rate
Mitigating factors
Budget risk
► Continuing efforts aimed at fiscal consolidation
► Implementation of medium-term budget planning
5
Other
► Prudent state banks management policy
► Gradual decrease of State's ownership in Ukraine’s banking sector
6
Major risk factors of Ukraine’s state debt

12. June 2019 12
Viable strategy for a medium term
Roadmap for Strategy implementation
Domestic market development
Issuances of Eurobonds in different currencies in international capital
markets
Widening of investor base and attraction of international investors to
domestic government bonds market
Active liability management operations (subject to favorable conditions)
Deepening of investor relations
Strengthening cooperation with IFIs and foreign governments on
concessional funding
Government's efforts to improve Ukraine’s credit ratings