Local retail chains expand in the market of financial borrowings

The positive climate in the securities market has triggered the issuers and the investors to increase their activity, as reflected in the increase of initial public offerings. According to Ukrsibbank experts the amount of IPO’s in October will double and will generate 70-80 mln. UAH Among new issuers in September that entered bond market, Lviv-based Intermarket company have made emission amounting 10 mln. UAH This is a third bond emission by retail chain companies in Ukraine. Previosly, “Velyka Kishenya” Ltd and “Tavriya B” Ltd had placed their bonds in the market.

Intermarket bonds carried interest rate of of 18 % and yearly offers. Emission parameters were in line with the norm for this market segment and were set up together with Optima Invest company, which managed the emission, and the underwriter and transfer agent Ukreximbank.

The decision to become public came to Intermarket with recognition of the need to attract additional liquid capital, as the company is involved in the construction of retail outlets. Andrey Dribnyuk of the company reports that 50 % of the bonds with a value of 5 mln. UAH were sold in the first three days upon emission, September 22^nd to 24^th. Timur Stremetskoy, chief securities sector economist at Ukreximbank in Lviv forecasts: “By the end of November all bonds will be sold to investors.”

Due to high liquidity of the banking system, bond market features good profitability for IPO’s. The analysts expect new issuers to come, including representatives of other retail chains. The banks being major agents in the bond market and looking to work with profitable issuers, expect the entrants to be in line with the trend. The experts speculate that optimal performance in the corporate sector is at the level of 16% to 18 % profitability rate.

Company Highlights

Intermarket Limited Trade company. Established in 1992. Owns a network of supermarkets and discounters in Lviv and Lviv region.

Ukreximbank. Established in 1992. One of the major Ukrainian banks, representing 73 branches in the country. 100 % State-owned.

Optima Invest investments company. Part of Optima group that also includes Optima Finance and Optima Capital.