Fixed Income

July 15, 2013

Quotes for Ukrainian sovereigns were generally higher last week, as more bids appeared after long-term yields approached the psychologically important 10% level. However, benchmark Ukraine-23s slid 0.5%, closing at 84.0/85.5 (10.1%/9.8%) with an implied spread to US Treasures of 740 bps. Medium-term Ukraine-17s increased by 0.7% to 89.6/90.6 (9.7%/9.4%). Among recent negative news, the IMF cut its growth forecasts for most major emerging markets, and cited weakness among them as justification for a weaker outlook for the rest of the world. It now expects 2013 global growth at 3.1% and 2014 output at 3.8%. However, a return to bullish sentiments in the US on the back of expectations of continued monetary stimulus outweighed any negative sentiments from the IMF’s move. Top Ukrainian corporate debt notably outperformed the sovereigns, with DTEK-18s adding a solid 1.8% to 93.4/95.5 (9.6%/9.1%) and MHP-20s jumping 3.8% to 92.2/92.6 (9.9%/9.7%). Metinvest-18s also got in on the action, climb