Fixed Income
October 04, 2011
PrivatBank’s debt instruments currently trade with yield-to-maturity ranging from 12.7% (maturity in 2016) to 17.1% (maturity in February 2012). We believe that PrivatBank is being held hostage to global distrust in banking assets and that its bonds have been unjustifiably punished. PrivatBank is Ukraine’s largest bank with a share of 13.3% in the banking system’s assets and 16.2% of the system’s corporate loans. The bank’s net interest margin is 5.9% and its cost/income ratio is 42% (both as of 1 July 2011). PrivatBank is also one of the most liquid banks in Ukraine with cash accounting for 15% of its assets. We thus believe PrivatBank’s debt to be a sound investment story.
