Fixed Income

January 03, 2018
 

Ukrainian sovereign Eurobonds were inactive during the holiday-shortened final week of 2017. However, for the year overall, the country’s debt papers performed very well. Quotes for the benchmark 10-year sovereigns rose 7.6% from 96 cents to 103 cents in 2017, with the yield falling from 8.2% to 7.3%. Although the overall economic recovery in the country has remained below optimistic expectations, a rise in global prices for commodities has provided some confidence that Ukraine’s steel and agro sectors will drive GDP higher in 2018. These expectations helped the VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) to advance by a whopping 65% for the year, from 33 cents to their current level of 55 cents.