Dear participants of “OTP Pension” and “FreeFlight”!
We invite you to review the performance results of the non-state pension funds managed by OTP Capital.
NBU Actions
Macroeconomic environment in Ukraine in June 2024:
- Reduction of the key interest rate to 13.0%
- Inflation lower than forecasted, 2.0% since the beginning of the year
- Reduction of the refinancing rate to 17.0%
- Reduction of deposit certificate rates
- Approval of $50 billion financial assistance from the G7 countries, which will be covered by the profits from frozen Russian assets
Hryvnia Instruments
Government bonds (OVDP). The Ministry of Finance started reducing the yields on hryvnia government bonds at primary auctions across the entire range:
- Up to 1 year – 14.7%-14.8%
- Up to 2 years – 15.2%-15.4%
- Up to 3 years – 16.8%
Deposits. Interest rates on term deposits responded variably – some banks lowered rates by 0.5% to levels of 8%-11.5%, while others raised them by 1% – 1.5%, driven by liquidity shortages.
Exchange rate of the hryvnia to the dollar. The NBU continues its easing policy in the foreign exchange market, helping to avoid peak loads. In June, demand for foreign currency was regulated by the regulator’s interventions, maintaining the official exchange rate of 40.55 UAH/USD, while the cash rate slightly strengthened from 41.1 to 40.9 UAH/USD.
Stocks. The stock index (UX from the Ukrainian Exchange) was in a sideways trend due to a lack of market transactions. The Ukrainian Exchange might lose its license according to the NCSRFSM. To avoid misleading users, OTP Capital temporarily suspends analysis and publication of exchange data until its status is clarified and trading resumes.
Foreign Currency Instruments
Government bonds (OVDP). Yields on foreign currency-denominated OVDP remain unchanged at primary auctions in 2024 at levels of 4.6% – 4.7% in dollars and 3.25% in euros. However, by limiting the placement volume, the Ministry of Finance forces investors to compete through yields to maturity. In the secondary market, yields on foreign currency OVDP do not exceed 4.2% in dollars and 3.0% in euros.
Eurobonds (OZDP). Demand for Ukrainian eurobonds in June was influenced by news of negotiations between holders and the government. The refusal of the creditors’ committee, representing eurobond holders, of the government’s proposal initially negatively affected OZDP prices, dropping them to 28%-30%. Later, seeing the government’s desire to find a compromise with the holders, demand for OZDP began to recover. Consequently, OZDP prices started to rise, reaching 31%-33% of nominal value by the end of June. The market remains nervous awaiting the final restructuring terms to be announced in July.
What happened to the assets of the “OTP Pension” fund?
In June, the “OTP Pension” fund sold OVDP worth 7.8 million UAH and purchased OVDP worth 7.8 million UAH with better yields. In the deposit part, funds were placed as follows: 3 million UAH in JSC “Ukreximbank,” 2.6 million UAH in JSC “Tascombank,” 2 million UAH in JSC “Oschadbank,” and 32 million UAH in JSC “PUMB.”
In June, “OTP Pension” earned 1.1% (or 13.5% annually) for its participants.
Overall, in June, the assets of the “OTP Pension” fund increased by 11,080,741 UAH, or 2.0%. The total net asset value at the end of the month was 560,995,587 UAH. Contributions to the fund in June amounted to 6,183,697 UAH, while pension payments totaled 883,417 UAH.
What happened to the assets of the “Free Flight” fund?
In June, the “Free Flight” fund’s portfolio acquired OVDP denominated in dollars worth 6.1 million UAH and made deposits in the following banks: 20,000 USD in JSC “PUMB,” 21,000 USD in JSC “SENS Bank,” and 49,700 USD in JSC “Tascombank.”
The rise in OZDP prices in June helped the “Free Flight” fund earn 0.1% (or 1% annually) in dollars.
Overall, in June, the assets of the “Free Flight” fund increased by 926,234 UAH, or 2.0%. The total net asset value at the end of the month was 47,591,178 UAH. Contributions to the fund in June amounted to 840,091 UAH, while pension payments totaled 2,347 UAH.
Let’s keep working. Stay calm, believe in Ukraine, and invest consciously!
