Ukrainian fixed income market

Weekly Review

(March 19 – 23, 2007)

Key economic indicators Summary Macroeconomics:...... ……………………………..…..…..…2 Indicator Indicator Change The current State Budget surplus for 2M2007 reached UAH 4.6 bn. UST 10Y Yield 4,61 0,07 Verkhovna Rada passed the law geared at support of Ukrainian LIBOR 1Y 5,21 0,00 chemical enterprises EURIBOR 1Y 4,12 0,02 NBU rate, UAH per 100$ 505 - World market…………………….………..…………………………..…..3 KIEIBOR ON, % 0,91% 0,03% Fed keeps funds target unchanged, acknowledges problems in the housing market KIEIBOR 30, % 5,29% 0,63% Acquisition of Ukrsotsbank can be delayed because Central Bank has PFTS Index 785,11 98,87 not yet approved the deal with Banca Intesa Source: NBU, PFTS, Reuters, Bloomberg Ministry of Finance announced its plans to select a lead manager for placing $700 mn. Eurobonds Fixed income …………………...…………………………………..…….6 CJSC “PA “Konti” released its financials for 2006 CJSC “AVK” released its financial statements for 2006 “Karavan” Ltd. published its financial statement for 2006

Serhiy Yahnych [email protected]

Dmitriy Romanovich [email protected]

Sergey Fursa [email protected]

Ukrainian Fixed Income Review March 19 – 23, 2007

MACROECONOMICS The current State Budget surplus for 2M2007 reached UAH 4.6 bn. This week in the first reading the Verkhovna Rada passed the law As of 1 Mar 2007 the budget proceeds amounted to UAH 20.3 bn. geared at support of Ukrainian chemical enterprises. Under this law (13.7% of annual targeted figures). UAH 16.7 bn. out of this amount was six Ukrainian chemical enterprises (OJSC “Dneproazot”, OJSC “Odessa receipts of the general fund, UAH 3.6 bn. - of the special fund of the Portside Plant”, CJSC “Severodonetsk company “Azot”, OJSC “Rivnea- budget. Proceeds of the general fund exceeded 7.3% the scheduled zot”, OJSC “Azot” and “Concern Stirol”) will be VAT-exempted when readings. Meanwhile cash expenditures of the general fund arrived at purchasing gas and benefit tax rebates when importing equipment. We 78.6% of the scheduled ones - low level of allocated funds application foresaw such developments on the part of the government following the was attributed to necessity of approval of the budget programs and hike in imported gas price up to $130 per thd. cub. m. Therefore, gas budget funds application procedure. Therefore, the budget surplus has cost when supplied to an enterprise fluctuated from $180 to $200 per generated in the light of overflow of revenues and subapplication of thd. cub. m. depending on an enterprise’s geographical location. This budget expenditures. Decent current indicators of the budget imple- resulted in adverse effect exerted on financial standing of the sector mentation in terms of receipts reflect high economic growth rates enterprises. We shall bear in mind that chemical industry is one of the late in 2006 - early in 2007. We shall remind that the last year budget core export-oriented branches of Ukraine. We expect this law to be ap- was reconciled with the deficit just at UAH 3.7 bn. (0.7% of GDP). Sub- proved in the second reading as well. ject to the Law of Ukraine “On State Budget of Ukraine 2007” the budget

deficit ceiling is UAH 15.7 bn. Сhemical enterprises Gas share in total costs in 2005 Budget Receipts, Surplus, % GDP Concern Stirol 48% 40 -8 Odessa Portside Plant 55% Severodonetsk company “Azot” 44% 35 Azot (Cherkassy) 32% -6 Dneproazot 39% 30 Rivneazot 31% -4 Source: Bloomberg 25

20 -2

15 0 10

Budget Receipts % GDP 2 5 Budget deficit (surplus) % GDP, RHS 0 4 1995 1997 1999 2001 2003 2005 2007F

Source: Treasury Calculations: UkrSibbank

Fixed Income Research 2 Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

WORLD MARKET

UST10Y Yield EMBI+ Spreads

5,2 330

5,0 EMBI+ Ukr aine 280 EMBI+ Global EMBI+Russia 4,8 230 UST10Y 4,6 180 4,4 130 4,2 80 4,0 30 Jul-06 Apr-06 Oct-06 Jan-07 Jun-06 Dec-06 Feb-07 Mar-07 Mar-06 Aug-06 Sep-06 Nov-06 May-06 Jul-06 Apr-06 Oct-06 Jun-06 Jan-07 Aug-06 Sep-06 Dec-06 Feb-07 Mar-07 Nov-06

May-06

Source: Bloomberg, Cbonds

Fed keeps funds target unchanged, acknowledges problems in the and Alfa is successful and down in case of further delay in resolving the housing market. On its regular meeting FOMC left the key short term shareholders conflict. interest rate at 5.25% for the sixth time in a row. The statement included In banking segment yields displayed an equivocal pattern. Top perform- phrases like “Recent indicators have been mixed” and “the adjustment in ers of the week was UkrSibbank 07/08 (-29..-34 b.p.). Change of yield of housing sector is ongoing” - indeed, macroeconomic data have been Nadra bank (+35 b.p.) seems to be purely technical – last week it went much less favorable comparing to last FOMC meeting. Regarding prices down 30 b.p. for no obvious reason. Fed indicated that “readings on core inflation have been somewhat ele- vated” whereas January’s statement pointed on “modest improvement”. A flop of the week is Ukrsotsbank-10, which went up 11 b.p. due to pos- sible delay of deal with Banca Intesa. Ukrsotsbank-08 yield went down 9 As we wrote before, Fed’s monetary decisions are stifled both by high b.p. – in our view this issue is overpriced. inflation and rising concerns that housing market problems might spread to the wider US economy. We expect that simultaneous concerns Acquisition of Ukrsotsbank can be delayed because Central Bank both about activity and price stability will exert pressure on USD has not yet approved the deal with Banca Intesa. This deal has been and “risk-free” securities in the short term. approved back in 2006, but Italian counterpart preferred to complete its merger with San Paolo first. After March 31st both sides have the right to UST10Y yield went up to 4.61% (+7 b.p.), rebounding after Fed’s meet- reconsider terms of the deal – in our opinion this increases the uncer- ing. Despite the fact that FOMC statement changed in favor of rate cut tainty about ownership of Ukrsotsbank. many believe that treasuries may be overpriced at its current yield. We retain positive outlook on risk-free securities, however their yields might Fears of defaults caused by global liquidity boom are rising. This be volatile in the short term. week Fitch published several researches, topics of which were dedicated to rising debt levels and high appetite for risk amid investors. Fitch once As we expected, emerging markets continued recovery: Spread EMBI+ again expresses strong concerns about growth rates of private credit, Global stabilized at 170 b.p. (-12 b.p.), EMBI+ Ukraine – at 136 b.p. (-9 especially in emerging countries and Eastern Europe. Fitch puts empha- b.p.). A good mood on emerging debt markets will continue to prevail, sis on the fact that scale and speed of private credit growth may seri- but we don‘t see a lot of potential for further spread shrinking - this week ously jeopardize macroeconomic developments in these countries: “Al- spreads will most likely move within a side trend. though strong credit growth is in many cases justified by fundamentals, Ukrainian sovereign bonds overperformed this week – yields of USD Fitch is particularly concerned by high credit growth where credit-to-GDP denominated fixed rate issues went down 9..11 b.p. has already reached a high level, as in Kazakhstan, the Baltics and Ukraine.” Albeit we don’t think that these researches may change per- Corporate nonbanking segment in general followed sovereigns with a ception of Ukrainian risk significantly, we will follow this issue closely and few exceptions. As we expected, Stirol-08 went down significantly (to produce a special report dedicated to possible credit growth risks for 10.13, -100 b.p.) due to high possibility of settling covenant breach issue Ukraine in the nearest future. successfully. Kyivstar went up 20..29 b.p. due to yet another escalation of conflict between Telenor and Alfa group. We recommend following the events closely: the price can go up in case asset swap between Telenor

Fixed Income Research 3

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

Ministry of Finance announced its plans to select a lead manager for placing $700 mn. Eurobonds. This issue will most likely appear in 2Q2007 - earlier one of the Deputy Ministers pointed to a possibility that the first sovereign Eurobond issue of this year can be placed in May. According to State Budget 2007 total volume of external financing is foreseen at level of $1.2 bn. Preliminary structure of this financing also includes $500 mn. loan from the World Bank. However it is possible that actual amount of Eurobonds placed in 2007 can exceed the scheduled amount. In 2006 Ukraine placed $1.9 bn. Eurobonds including $1.0 bn. 10Y USD issue and 3 issues in CHF and JPY totaling $900 mn.

Fixed Income Research 4

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

Eurobonds quotations as at March, 23, 2007 Bond Rate Maturity Average price, % Change Yield on average Change of nominal price, % p.a. Azovstal 9,13 28.02.11 100,41 0,00 8,99 0,00 ZAZ 9,75 22.12.09 99,75 0,00 9,82 0,00 Kiev 8,63 15.07.11 110,58 0,09 5,81 -0,03 Kiev 8,75 08.08.08 103,83 0,09 5,78 -0,11 Kiev 8,00 06.11.15 106,50 0,22 6,98 -0,04 Kyivstar GSM 10,38 17.08.09 108,67 -0,75 6,39 0,29 Kyivstar GSM 7,75 27.04.12 104,44 -0,89 6,70 0,20 MHP 10,25 30.11.11 102,64 0,66 9,53 -0,18 Naftogaz Ukrainy 8,13 30.09.09 101,66 0,59 7,39 -0,27 Ukrchem Capital (Stirol) 7,88 19.08.08 97,13 1,30 10,13 -1,00 Yuzhmash 8,00 21.01.09 102,14 0,18 6,83 -0,03 Alfa Bank 9,75 22.12.09 102,14 0,17 8,84 -0,08 Nadra 9,50 07.11.08 100,05 -0,52 9,46 0,35 Privatbank 8,00 06.02.12 99,03 0,20 8,24 -0,05 Privatbank 8,75 09.02.16 99,99 -0,07 8,71 0,03 FUIB 9,75 16.02.10 101,10 -0,03 9,30 0,01 Ukreximbank 7,75 23.09.09 102,69 0,09 6,56 -0,05 Ukreximbank 7,65 07.09.11 102,92 0,03 6,87 -0,01 Ukreximbank 6,80 04.10.12 98,20 -0,25 7,20 0,06 UkrSibbank 8,95 14.07.08 103,03 0,38 6,30 -0,34 UkrSibbank 7,75 21.12.11 100,95 0,13 7,50 -0,03 Ukrsotsbank 9,00 06.06.08 102,37 0,06 6,87 -0,09 Ukrsotsbank 8,00 22.02.10 100,31 -0,28 7,88 0,11 Finance and Credit 10,38 25.01.10 101,32 0,49 9,80 -0,20 Forum 10,00 30.10.09 104,00 0,00 8,26 0,00 Ukraine-09 (FRN) 8,90 05.08.09 106,34 0,46 5,90 -0,22 Ukraine-11 6,88 04.03.11 103,44 0,33 5,88 -0,10 Ukraine-13 7,65 11.06.13 108,56 0,45 5,98 -0,09 Ukraine-15 (EUR) 4,95 13.10.15 96,01 0,18 5,55 -0,03 Ukraine-16 6,58 21.11.16 101,63 0,80 6,35 -0,11 Russia-30 5,00 31.03.30 113,70 0,00 5,57 0,00 US Treasuries (10Y) 4,63 15.02.17 100,09 -0,53 4,61 0,07 Source: Reuters, Bloomberg

JPMorgan EMBI+ March, 23, 2007 Key Market Indicators March, 23, 2007

EMBI+ Country spread Week Month Indicator Value Week Month EMBI+ Global 170 -12 2 LIBOR 1Y 170 -12 2 Argentina 209 -12 2 EURIBOR 1Y 209 -12 2 Brazil 175 -16 -4 EUR/$ 175 -16 -4 Turkey 216 -17 2 $/JPY 216 -17 2 Russia 100 -9 1 Gold LME 100 -9 1 Ukraine 136 -9 12 Platinum LME 136 -9 12

Source: Reuters, Cbonds

Fixed Income Research 5

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

FIXED INCOME MARKET

CJSC “PA “Konti” released its financials for 2006 (UAH 80 mn. AVK pursues conservative financial policy, shareholder’s equity re- issue redeemable 10.11.2008, current coupon yield - 14.5% p.a ). We mained 50% and higher within 2002-2006. We estimate the issuer’s point out to substantial revenues flow (55%). As a result, the issuer’s net financial standing as steady. Besides, we view AVK bonds as amid income completely coincided with our forecasts - UAH 1.23 bn. Thereat, those that are the most attractive in the Ukrainian debt market. In the company managed to maintain its gross margin at the top level in the our opinion, a fair spread of these bonds to OVGZ is 394 bp. sector (38.7%). Revenues growth rates were underpinned by production capacities increase within the framework of the investment development program, mainly targeted at output of premium and superpremium prod- “Karavan” Ltd. (Series А, UAH 30 mn.) published its financial ucts. Confectionery production output in 2006 totaled 131.9 thd. tons statement for 2006. This statement is not consolidated by retail network exceeding 24% vs. 2005 (chocolates production increase came over and reflects solely operating figures of grocery hypermarket located in 188%). OIBDA growth rates lag by far behind incomes growth rates. Kiev. In addition to hypermarket in Kiev the network comprises super- OIBDA reached UAH 110.2 mn (+22%), OIBDA margin decreased to and hypermarkets in Kharkov opened in 2H2006. As at YE2006 overall 10.8% (13.7% in 2005). The key reasons for OIBDA underrunning turned space of the network totaled 22.0 thd. sq. m. By YE2009 the company out to be upsurge in distribution costs due to new brands promotion, plans to expand tangibly (+16 stores), selling spaces size is to come active usage of TV commercials (+134%) and increased debt leverage over 110 thd. sq. m. resulted in growth of finance costs (+147%). 2006 financial liabilities rose In 2006 the issuer’s revenue amounted to UAH 355.2 mn. (taking into by 40%, Net Debt/Total Balance ratio attained 0.6. Shareholders’ equity account stores in Kharkov - over UAH 380 mn.), a 24.6% YoY growth. reduced to 23%. Consequently, OIBDA/Interests ratio halved vs. 2005 It’s worth mentioning that such upsurge appeared without expansion in down to 2.1. Diminution of creditworthiness turned out to be an expected number of outlets and spaces (new trading outlets are included in the implication arising out from development strategy of the company. We balance of subsidiaries). Gross margin rose from 7.5% up to 8.5%, believe negative effects to be temporary and estimate the issuer’s OIBDA margin remained almost unchanged - 2.4% (in 2005 - 2.5%), financial standing as stable. In our opinion, a fair spread of the coinciding with our forecast but lower than average sector indicators issuer’s bonds to OVGZ is 455 bp. (4.0%-6.0%). Thereat the issuer features absence of property units in the CJSC “AVK” released its financial statements for 2006. 2006 Net balance, which are leased from the companies of “Karavan” Group. The Revenue is UAH 983.9 mn., a 2.7% YoY increase. Insignificant revenues issuer’s debt has remained high. Debt shares about 50% in liabilities, growth being essentially inferior if compared to similar peers’ figures Debt/OIBDA, Debt/Equity ratios are 7.8 and 9.3, respectively. Thereat appeared on the back of decline in output volumes. For 2006 the com- OIBDA/Interests ratio sticks to an average sector level - 2.4. On balance pany reduced its confectionery production volume by 11.3% to UAH the issuer’s financial standing is rather decent, there have been no 107.2 thd. Decline in production volumes resulted from structural reorien- substantial changes for the last quarter. tation with focus on higher price brackets products and waiving from By Apr 5 Karavan will have announced the coupon rate on Series A production of a set of confectionery. This caused drop in operating and (UAH 30 mn.) for 5th -8th coupon periods. Currently the coupon rate is financial data in 1H putting screw on over indicators of 2006. Positive 15% p.a. We believe a fair spread is around 550 bp. to OVGZ that is at trends have been observed since 4Q2006 and considered by us as the moment about 14% p.a. However, in view of expectations for liquidity determinatives for 2007 operating and financial performance. The com- decline in the banking system and taking into account an average level pany’s creditworthiness retained at a high level despite a 12% shrinkage of coupon rates in the market, we don’t set for change in coupon rate. in OIBDA to UAH 82.7 mn. OIBDA/Interests ratio is top-flight at 4.8. Regardless the realization of ample investment projects, Net Debt grew by 18%, financial burden is not high (Net Debt/Total Balance - 0.24).

Fixed Income Research 6

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

Corporate and municipal bonds trading, March, 23, 2007 Issuer (issue, series) Transaction price Trade volume, Rate Yield Maturity Early redemption Coupon payout TAS-Investbank, В 1 053,21 68 687 550,00 14,00% 15,62% 07-Oct-11 12-Oct-07 10-Oct-08 LuAZ 997,68 31 347 086,35 14,00% 15,66% 14-Jun-10 18-Jun-07 18-Jun-07 Kiev 1 051,74 25 291 642,32 14,00% 6,25% 25-Nov-08 26-Nov-07 25-May-07 Druzhba narodov “Nova”, В 1 037,55 24 360 870,00 14,00% 12,01% 18-Aug-08 18-Aug-08 21-May-07 Khreshatik, Е 1 018,83 23 993 446,50 13,00% 8,20% 17-May-10 17-May-07 17-May-07 Soyuz-Victan 1 016,05 23 055 591,50 14,00% 12,48% 12-Mar-09 14-Mar-08 15-Jun-07 Rodovid Bank, А 1 057,43 21 144 900,00 13,50% 8,35% 22-Sep-09 25-Sep-07 27-Mar-07 Kievgorstroj-1, А 1 006,39 15 116 105,20 14,00% 13,34% 06-Dec-13 14-Dec-07 15-Jun-07 Express-Bank, А 1 000,00 15 000 000,00 13,00% 13,60% 11-Jun-09 14-Jun-07 14-Jun-07 Galnaftogaz, D 1 036,53 10 330 300,00 14,00% 11,97% 25-Jun-10 30-Jun-07 30-Mar-07 ProCredit Bank, F 1 026,36 10 263 600,00 13,00% 13,05% 30-Sep-10 02-Oct-08 03-Jan-08 Creditprombank, С 1 024,86 6 103 110,00 13,00% 12,10% 14-Jul-11 19-Jul-07 19-Apr-07 ProCredit Bank, D 1 005,68 5 531 240,00 12,50% 9,83% 11-Jun-07 11-Jun-07 11-Jun-07 МТI, А 1 023,12 5 115 600,00 15,00% 13,49% 09-Nov-10 13-Nov-07 15-May-07 Favorit, А 1 003,26 5 016 300,00 17,00% 17,79% 09-Jun-09 12-Jun-07 11-Jun-07 ТММ, А 1 001,65 5 008 250,00 15,00% 14,70% 14-Nov-07 14-Nov-07 16-May-07 ТММ, B 1 001,23 5 006 150,00 15,00% 14,81% 12-Dec-07 12-Dec-07 13-Jun-07 Forum, В 992,16 4 960 800,00 11,50% 13,02% 10-Dec-08 12-Dec-07 13-Jun-07 Kviza-Trade 1 012,97 2 968 927,25 14,75% 12,79% 06-Dec-07 06-Dec-07 07-Jun-07 Galnaftogaz, Е 1 022,78 2 403 533,00 14,00% 13,03% 26-Jul-10 31-Jul-07 30-Apr-07 Galnaftogaz, F 1 016,29 2 388 281,50 14,00% 11,95% 26-Aug-10 30-Aug-07 31-May-07 Creditprombank, D 1 037,64 2 052 380,00 14,00% 11,99% 15-Aug-11 20-Aug-08 21-May-07 Borispol, 3А 1 000,89 1 851 646,50 10,00% 10,59% 19-Apr-10 19-Apr-10 23-Apr-07 Furshet, С 1 023,52 1 688 445,00 14,00% 14,49% 15-Apr-09 18-Apr-07 18-Apr-07 Karavan 1 016,92 1 565 039,88 15,00% 15,30% 26-May-09 09-May-07 09-May-07 Kviza-Trade, В 1 025,63 1 492 520,65 14,50% 14,27% 18-Jul-08 20-Jul-07 20-Apr-07 Atlant-M, А 1 012,25 1 417 150,00 16,00% 14,87% 07-Dec-09 10-Dec-07 11-Jun-07 Dnestr Bank,F 1 031,12 1 029 057,76 17,75% 12,45% 31-Jul-07 31-Jul-07 30-Mar-07 Metallurgical centre, А 267 000,00 267 000,00 - - - - - Activ Bank, В 1 024,53 204 906,00 14,00% 12,84% 25-Jul-08 27-Jul-07 27-Apr-07 Donetsk, С 1 028,56 196 454,96 12,00% 10,80% 05-Sep-11 07-Sep-09 11-Jun-07 AVK, 2А 1 000,73 150 109,50 14,00% 13,89% 16-Dec-08 17-Dec-07 18-Jun-07 UBDP, А 1 021,91 102 191,00 14,00% 13,65% 21-Oct-08 23-Apr-07 23-Apr-07 Svit Electroniki 1 030,00 94 760,00 16,50% 15,55% 21-Oct-08 24-Oct-07 24-Apr-07 Medical centre Dobrobut 1 004,38 18 078,84 16,00% 15,99% 08-Jun-09 08-Jun-09 11-Jun-07 Total 325 223 023,71

OVGZ redemption 2007 Series Ammount, UAH Date UA3B00021204 621 567 200,00 16-May-07 UA3B00012609 78 003 000,00 23-May-07 UA3B00012906 221 497 234,00 06-Jun-07

Fixed Income Research 7

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

OVGZ Yield OVGZ 20909 Yield History

10% 13%

12% V 11% 9% 10% 20909 VAT1 VAT2 21006 9% 22400 20800 22301 8% 8%

21204 7%

6% 7%

0,0 0,5 1,0 1,5 2,0 2,5 Jul-06 Oct-05 Jan-06 Apr-06 Jun-06 Oct-06 Jan-07 Feb-06 Feb-07 Sep-05 Dec-05 Mar-06 Aug-06 Sep-06 Dec-06 Mar-07 Nov-05 Nov-06 May-06

Trade Volumes of Corporate and Municipal Bonds Trade Volumes of OVGS 900 600 800 500 700 600 400 500 300 400 300 200 200 100 100 0 0 Jul-06 Oct-06 Apr-06 Jan-07 Jun-06 Dec-06 Feb-07 Mar-07 Aug-06 Sep-06 Mar-06 Jul-06 Nov-06 May-06 Apr-06 Oct-06 Jan-07 Jun-06 Dec-06 Feb-07 Mar-07 Mar-06 Aug-06 Sep-06 Nov-06 May-06

PFTS Equity Trade Volumes PFTS Index performance 800 850 700 750 600 500 650

400 550 300 450 200 100 350

0 250 Jul-06 Apr-06 Oct-06 Jun-06 Jan-07 Mar-06 Aug-06 Sep-06 Dec-06 Feb-07 Mar-07 Jul-06 Nov-06 Oct-06 Apr-06 May-06 Jan-07 Jun-06 Dec-06 Feb-07 Mar-07 Aug-06 Sep-06 Mar-06 Nov-06 May-06

Fixed Income Research 8

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

19%

17% UKRSHAMPINION ТММ, A MKS MOLIS ZTK CITY COM KVIZA- TRZ TRADE ZLAGODA 15% BAYADERA, B FURSHET, B

KARAVAN BAYADERA, A KONTI AVK 2B DNN ODESSA, C

KHARKOV AVK 2C ODESSA, B 13% ZAPOROZHJE,E ZAPOROZHJE, D ODESSA, A IVANO-FRANKOVSK DONETSK, B DONETSK GALNAFTOGAS, E

BID YIELD ZAPOROZHJE, C BORISPOL 11% ZAPOROZHJE, B

KHARP-TRADING

9% OVGZ

7%

5% 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 DAYS TO MATURITY (EARLY REDEMPTION)

Source: PFTS Calculations: UkrSibbank

Fixed Income Research 9

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

PFTS quotations as at March , 19 – 23 Issuer BID ASK Early/ re- Coupon Rate BID ASK % Change % Change demption payout YTM Change YTM Change Corporate Atlant-M, A 100,65 -0,31 102,01 -0,31 01-Feb-07 11-Jun-07 16,00% 15,00% 0,00% 13,00% 0,00% AVK, 2А 100,15 0,00 101,54 0,00 10-Dec-07 18-Jun-07 14,00% 14,00% 0,00% 12,00% 0,00% AVK, 2B 100,93 0,00 102,67 0,00 25-Feb-08 28-May-07 14,00% 14,00% 0,00% 12,00% 0,00% AVK, 2С 99,94 0,00 101,68 0,00 25-Feb-08 28-May-07 12,00% 13,00% 0,00% 11,00% 0,00% Bayadera, A 99,81 0,03 100,51 -0,17 31-Jul-07 01-May-07 14,00% 14,52% -0,06% 12,49% 0,39% Bayadera, B 99,71 -0,07 100,51 -0,17 21-Aug-07 22-May-07 14,00% 14,69% 0,19% 12,69% 0,34% Borispol, 3А 98,50 -0,19 100,31 -0,19 19-Apr-10 23-Apr-07 10,00% 11,00% 0,00% 10,25% 0,00% Velyka Kyshenya-Finances 99,97 -0,27 102,86 -0,27 18-Aug-08 21-May-07 14,00% 14,00% 0,00% 11,75% 0,00% Zernotorgovaya kompaniya 99,72 -0,30 100,75 -0,30 08-Oct-07 09-Apr-07 15,50% 16,00% 0,00% 14,00% 0,00% Intermarket, В 99,65 0,01 100,74 0,07 13-Aug-07 14-May-07 15,50% 16,37% 0,00% 13,50% -0,27% Intermarket, С 99,20 0,01 100,97 0,02 13-Oct-07 14-Apr-07 15,50% 17,01% 0,04% 13,64% -0,10% Karavan 100,09 -0,29 100,61 -0,29 09-May-07 09-May-07 15,00% 14,00% 0,00% 10,00% 0,00% Kviza-Trade, А 100,42 0,00 102,26 0,00 06-Dec-07 07-Jun-07 14,75% 15,00% 0,00% 12,25% 0,00% Kviza-Trade, В 99,89 -0,28 100,93 -0,28 20-Jul-07 20-Apr-07 14,50% 14,75% 0,00% 11,50% 0,00% Kernel-Trade, А 99,24 -0,31 100,61 -0,31 27-Aug-07 28-May-07 16,00% 16,00% 0,00% 13,00% 0,00% Kernel-Trade, В 99,98 -0,31 101,54 -0,31 08-Oct-07 09-Apr-07 16,00% 16,00% 0,00% 13,00% 0,00% Kiev-Konty, А 99,97 -0,28 101,50 -0,28 12-Nov-07 14-May-07 14,50% 14,50% 0,00% 12,00% 0,00% Galnaftogaz Concern, Е 100,81 -0,07 101,46 -0,10 30-Jul-07 30-Apr-07 14,00% 11,61% 0,08% 9,75% 0,05% Creditprombank, С 100,55 0,06 100,80 0,01 19-Jul-07 19-Apr-07 13,00% 11,24% -0,27% 10,42% -0,16% Luaz 99,99 3,22 102,55 0,80 18-Jun-07 18-Jun-07 14,00% 14,00% 0,00% 3,14% -3,89% МКС, А 99,98 -0,31 - - 01-Oct-07 02-Apr-07 16,00% 16,00% 0,00% - - Molis 100,02 -0,30 - - 05-Jun-07 05-Jun-07 15,50% 15,60% 0,00% - - MTI, A 99,67 -0,29 100,58 -0,29 13-Nov-07 15-May-07 15,00% 15,50% 0,00% 14,00% 0,00% Pervy LVZ 99,31 99,98 103,81 104,48 31-May-07 31-May-07 16,50% 20,14% - - - Pridneprovsky kombinat 100,80 0,00 105,00 0,00 04-Dec-07 05-Jun-07 16,00% 14,76% -0,04% 8,54% -0,19% City com 99,79 -0,30 102,03 -0,30 07-Jan-08 09-Apr-07 15,75% 16,00% 0,00% 13,00% 0,00% Sojuz-Victan 99,99 -0,27 101,38 -0,27 14-Mar-08 15-Jun-07 14,00% 14,00% 0,00% 11,00% 0,00% Teknomarket Aladdin - - - - 18-Sep-07 19-Jun-07 16,50% - - - - ТММ, А 100,88 0,00 - - 14-Nov-07 16-May-07 15,00% 16,00% 0,00% - - ТММ, В 99,69 0,00 101,15 0,77 12-Dec-07 13-Jun-07 15,00% 16,00% 0,00% 13,29% -1,15% ТММ, С 102,20 0,00 104,00 0,16 09-Jan-08 11-Apr-07 15,00% 16,00% 0,00% 9,72% -0,32% ТRZ 99,98 -0,29 100,48 -0,29 06-Jun-07 06-Jun-07 15,00% 15,00% 0,00% 12,50% 0,00% Ukrshampinion, C 99,69 -0,19 100,49 -0,19 12-Jun-07 12-Jun-07 15,00% 16,39% 0,88% 12,66% 0,59% Fozzy-Food 99,99 -0,31 100,90 -0,31 13-Sep-07 14-Jun-07 16,00% 16,00% 0,00% 14,00% 0,00% Fora 99,96 -0,31 - - 18-Feb-08 21-May-07 16,00% 16,00% 0,00% - - Furshet, B 99,97 -0,28 101,22 -0,28 11-Feb-09 16-May-07 14,50% 14,50% 0,00% 13,00% 0,00% Furshet, C 99,97 -0,27 100,41 -0,27 18-Apr-07 18-Apr-07 14,00% 14,00% 0,00% 8,00% 0,00% KHARP-Trading 102,10 0,20 102,90 0,20 29-Jul-07 29-Apr-07 16,00% 9,84% -0,85% 7,57% -0,96% Cherkassy poultry plant, A 100,27 -0,30 101,49 -0,30 13-Nov-07 15-May-07 15,50% 15,00% 0,00% 13,00% 0,00%

Municipal Donetsk, A 100,94 0,00 103,42 0,00 16-May-07 16-Feb-07 14,00% 11,52% -0,12% 5,27% -0,40% Donetsk, В 99,80 0,00 108,25 0,00 11-Jul-08 11-Apr-07 11,75% 11,82% 0,00% 8,84% -0,01% Donetsk, C 100,58 -0,23 103,06 -0,23 07-Sep-09 11-Jun-07 12,00% 12,25% 0,00% 11,00% 0,00% Zaporozhye, B 99,82 -0,20 100,17 -0,20 10-Jul-07 10-Jul-07 10,50% 11,25% 0,00% 10,00% 0,00% Zaporozhye, C 99,45 -0,21 - - 08-Jul-08 10-Jul-07 11,00% 11,75% 0,00% - - Zaporozhye, D 99,16 -0,22 - - 07-Jul-09 10-Jul-07 11,50% 12,25% 0,00% - - Zaporozhye, E 98,96 -0,23 102,77 -0,23 06-Jul-10 10-Jul-07 12,00% 12,75% 0,00% 11,25% 0,00% Ivano-Frankovsk 99,80 0,00 109,50 0,00 28-Feb-11 31-May-07 12,00% 12,06% 0,00% 9,10% -0,01% Kiev 101,31 0,00 - - 25-Nov-08 25-May-07 14,00% 12,50% 0,00% - - Odessa, А 100,20 -0,23 100,90 -0,23 31-Dec-07 30-Jun-07 12,00% 12,00% 0,00% 11,00% 0,00% Odessa, В 100,57 -0,25 - - 31-Dec-08 30-Jun-07 13,00% 13,00% 0,00% - - Odessa, С 101,26 -0,27 - - 31-Dec-10 30-Jun-07 14,00% 14,00% 0,00% - - Kharkov 97,83 -0,21 101,02 -0,21 26-Jun-08 29-Mar-07 10,75% 13,25% 0,00% 10,25% 0,00% Cherkassy 88,99 -0,23 109,74 -0,23 27-Dec-10 30-Mar-07 12,00% 15,95% 0,11% 8,92% 0,06% Source: PFTS Calculations: UkrSibbank

Fixed Income Research 10

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

FIXED INCOME MARKET EVENTS

Initial placement Early redemption Tenor, Issuer Issue volume, UAH, mln. Coupon rate Date (put option) months 15-Apr-07 Progress, E 5,0 16,5% annual 61 Interest payment Date Issuer Issue volume, UAH, mln. Coupon rate 26-Mar-07 Molochny dom 2 В 30,00 15,0% 26-Mar-07 Ukrzernoprom, В 30,00 10,0% 27-Mar-07 Alfa-Bank Ukraine, D 200,00 13,0% 27-Mar-07 Svit Electroniki В 10,00 16,5% 27-Mar-07 Rodovid Bank 100,00 13,5% 27-Mar-07 Stara Fortetsa, А 6,00 16,0% 27-Mar-07 Yunicon, А 18,00 10,0% 29-Mar-07 Euro Lease, А 20,00 15,0% 29-Mar-07 Milk factory OLKOM, В 5,00 16,0% 29-Mar-07 Kharkov 100,00 10,8% 30-Mar-07 Dnestr Bank F 8,00 17,8% 30-Mar-07 East-Industrial Commercial Bank С 5,00 15,0% 30-Mar-07 State Mortgage Institution, B 45,00 9,5% 30-Mar-07 State Mortgage Institution, А 30,00 9,5% 30-Mar-07 State Mortgage Institution, C 50,00 9,5% 30-Mar-07 State Mortgage Institution, D 65,00 9,5% 30-Mar-07 State Mortgage Institution, E 85,00 9,5% 30-Mar-07 State Mortgage Institution, F 95,00 9,5% 30-Mar-07 State Mortgage Institution, G 100,00 9,5% 30-Mar-07 State Mortgage Institution, H 150,00 9,5% 30-Mar-07 State Mortgage Institution, I 180,00 9,5% 30-Mar-07 State Mortgage Institution, J 200,00 9,5% 30-Mar-07 Galneftegaz, D 30,00 14,0% 30-Mar-07 Spetstekhosnastka 10,00 16,0% 30-Mar-07 Cherkassy 5,00 12,0% 02-Apr-07 Galneftekhim, А 5,00 17,0% 02-Apr-07 MKS, А 30,00 16,0% 03-Apr-07 Ukrainian insurance group, А 20,00 14,0% 05-Apr-07 ProCredit Bank, F 175,00 13,0% 08-Apr-07 Ukrainian automobile holding 100,00 15,0% 09-Apr-07 Agrostrojpererabotka, B 25,00 17,0% Redemption and early redemption Date Issuer Event Issue volume, UAH mln. Rate, current/new set 26-Mar-07 Milk house, 2В Early redemption 30,0 15,00%/15,00% 28-Mar-07 Svit elektroniki, В Early redemption 10,0 16,50%/n/a 04-Apr-07 Ukrainian insurance group, А Early redemption 30,0 14,00%/14,00% 08-Apr-07 Ukrainian automobile holding, A Early redemption 100,0 15,00%/n/a 11-Apr-07 Unimilk, В Early redemption 20,0 14,00%/14,00% 14-Apr-07 Lozovsky press factory, А Early redemption 50,0 16,00%/16,00% 16-Apr-07 Apteka, B Early redemption 10,0 15,00%/n/a 16-Apr-07 Prichernomorie В Early redemption 5,0 12,00%/n/a 16-Apr-07 KhARP Trading В Early redemption 30,0 16,00%n/a 18-Apr-07 Furshet, С Early redemption 30,0 14,00%n/a 19-Apr-07 Intermarket, E Early redemption 25,0 15,50%/15,50%

Fixed Income Research 11

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

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Fixed Income Research 12

Ukrainian Fixed Income Review July, 24-28, 2006 March 19 – 23, 2007

This research is prepared by the analysts of JSIB “UkrSibbank” for information purposes only and should not be construed as the offer to buy or sell any financial instruments. Any information in this report is based on the data obtained from sources considered to be reliable by JSIB UkrSibbank but no responsibility are borne by the Bank with regard to accuracy and completeness of the data. This matter is aimed at distribution amid professional participants of the security market and institutional investors. Opinions, estimates and recommendations contained herein may not be relied on as the only ground to effect any transaction in the security market. Every investor should make his own judgments to invest with using this research solely as one of the sources conducive for decision-making. Opinions, estimates and recommendations contained in this matter are considerations of JSIB “UkrSibbank” analysts. Opinion of JSIB “UkrSibbank” may differ the analysts’ opinions expressed in this review. JSIB “UkrSibbank” has no responsibility for third parties’ operations including but not limited to any other action and/or failure to act of such third parties together with positive and/or negative results of such operations carried out on the grounds of opinions, estimates and recommendations expressed herein. Any reprinting, copying, duplicating, spreading to third parties of this review without written permission of JSIB “UkrSibbank” is strictly prohibited.

Fixed Income Research 13