“Antikolomoiskyi” law and the IMF

OTP Capital column: A view at current events

Dear investors and depositors, traditionally, we publish our operational reports on the vision of the current economic situation in the world and in Ukraine, as well as the status of assets in the portfolios of investment and pension funds managed by OTP Capital.

What is happening in Ukraine?

In Ukraine, the movement towards the IMF has reached the finish line. On May 13, 2020, the Verkhovna Rada finally voted for the law No. 2571-д “On Improvement of Certain Mechanisms for Banking Regulation”, the so-called “antikolomoiskyi” law. This law was the last requirement of the IMF that Ukraine had to comply with in order to receive the financing. Therefore, at the current stage, everything is done, and cooperation with the IMF will begin in a few weeks, and later, the European Union, the World Bank and the ordinary investors will join the IMF.

What is happening in the G-bonds market and how does it affect the results of the funds?

The G-bonds market, which is the most important for OTP Capital funds, has entered a phase of aggressively decreasing interest rates. Significant reduction of risks in the financial market, arrival of the IMF, low discount rates, low inflation, and stable UAH have created a favorable environment for the secondary G-bonds market, where the yields of 15% quickly fell to 10-13%. In the presence of such yields on the secondary market, the government was able to resume the primary G-bonds auctions and raise funds in the budget by selling the bonds at 11%.

As a result, a significant decrease in the G-bonds yields has increased the value of government bonds in the portfolios of funds managed by OTP Capital. In particular, the OTP Classic fund has grown by 1.7% since the beginning of the month, OTP Kids – by 3.7%, OTP Podviynyi Rezultat – by 4.3%, OTP Podviynyi – by 4.3%, Invest+ – by 2.9%. OTP Pension fund has a similar dynamics.

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