Daily monitor

According to Interfax, Donbasstransgas has decreased the gas supply to Mariupol Illich ISW. Gas pressure has diminished by 1.8 times because Mariupol Illich ISW owes Donbasstransgas about UAH 300 mln for the gas it has consumed. The company notes that it has about UAH 1.8 bln in VAT that the government has not refunded.

The International Financial Corporation (IFC) has decided to lend USD 50 mln to Myronivsky Hliboproduct (MHP) [MHPC LI, HOLD], a major poultry producer in Ukraine, and to partially guarantee the leasing of machinery for up to USD 18 mln. MHP will use these funds to expand its land bank by 120 thsd ha and to purchase machinery.

The European Bank for Reconstruction and Development (EBRD) is going to lend USD 25 mln to Mriya Agroholding [MAYA GR, BUY], a major Ukrainian crops producer. The final decision will be made at the Board of Directors’ meeting scheduled for July 6. The loan may be provided for the replenishment of working capital.

The National Bank of Ukraine cut the interest rate by 75 b.p. to 9.5%, explaining it by improving economic situation that had existed at the beginning of the year. This measure was particularly adopted in the context of the GDP growth by 4.8% in Q1 and slowdown of inflation in May to 8.5% YOY.

According to Interfax, Ukraine’s largest pipe corporation, Interpipe, successfully completed the requalification procedure for major oil and gas companies in Oman, the UAE, Egypt, and Kuwait. The procedure resulted in expended pipes for oil and gas extraction and transportation.

CPI in Ukraine declined by -0.6% in May after a rate of -0.3% in April (for the first time in the last 20 months). Since the beginning of 2010 inflation has amounted to 3.7% (8.5% yoy). In 2009 inflation slowed down to 12.3% from the rate of 22.3% in 2008.

Motor Sich [MSICH UZ, BUY] reported output of about UAH 1.46 bln in January-May 2009, reflecting YoY growth of 28.3%. According to the company, 92% of its sales were export-driven, the same 92% of sales that were attributable to aviation equipment.

At its AGM held on June, four shareholders of Ukraine’s second-biggest steelmaker, Azovstal, decided not to pay dividends. This decision left about a billion dollars in retained earnings undistributed.

Ukrainian auto producers produced 6.8 thsd cars in May vs. 6.7 thsd in April. Zaz increased its production by 9% MoM (from 3.9 thsd to 4.2 thsd), AutoKrAZ [KRAZ UZ, U/R] showed a decline of 24% MoM (the plant produced 50 cars in May vs. 66 cars in April), and Bohdan [LUAZ UZ, U/R] showed a 16% MoM decline (from 1.5 thsd to 1.3 thsd). As a result, Ukraine’s automakers produced 24.2 thsd cars during the first five months of 2010, 19% fewer than a year ago.

Verhovna Rada approved major tendencies for 2011 budget policy, which state that the budget deficit in 2011 will not exceed 4.5% of GDP. Public debt will tend to remain stable at less than 40% of GDP. Budgetary policy calls for taxation system reform, which implies a gradual decrease in the tax burden on taxpayers, a gradual increase in excise-duty rates, and the introduction of additional taxes on citizens with high incomes. Significant attention will be paid to increasing social standards.