Fixed Income

August 12, 2013

Quotes for Ukrainian sovereign Eurobonds declined last week, with benchmark 10-year notes falling by 1.1% to 87.9/88.6 (9.4%/9.3%), as Goldman Sachs released a pessimistic report on the state of the country’s finances which suggested that the Ukrainian government’s capacity to raise further cash on the domestic bond market may be limited. Sovereigns have seen only a weak rebound since bottoming in late June, with the country’s 5-year CDS still hovering above 800 points. However, the medium-term fundamentals for Ukrainian debt remain appealing, with MinFin reporting that public debt stood at USD 68bn as of Jun 30, implying that the debt to GDP ratio is still below 40%. Ukraine-17s edged down by 0.3% to close at 91.4/92.6 (9.2%/8.9%). Corporate names were mixed, with Ferrexpo-16s slipping 0.5% to 94.0/95.0 (10.5%/10.1%) while MHP-20 gained 1.4% to close at 92.8/93.2 (9.8%/9.6%).