EAVEX Weekly

June 20, 2017

The yield on Ukrainian long-term sovereigns increased last week following the US Federal Reserve’s interest rate hike from 1% to 1.25%, which was fully expected by the market. Despite the current situation of low trading activity at elevated price levels, we think Ukrainian Eurobonds still have some room for upside amid an environment of domestic economic recovery and relatively calm situation on the front line with pro-Russian separatist territories. Meanwhile, Finance Minister Oleksandr Danyliuk confirmed that the country is ready to enter the market with a new sovereign Eurobond issue but is waiting for the next loan tranche from the IMF, which would be a positive signal for investors. The last time Ukraine placed a bond issue on commercial terms was in the summer of 2013, when it sold USD 1.25bn 10-year Eurobonds at 7.5%.