Fixed Income

September 16, 2013

Ukrainian sovereigns continued to languish last week, with yields on the country’s longest issue reaching 10%, as there has been no rush by investors back into emerging market debt ahead of an expected “tapering” announcement by the US Federal Reserve at this week’s meeting. Locally, UkrStat raised its estimate of the 2Q13 GDP decline from 1.1% to 1.3%. In an adjusted quarter-on-quarter basis, GDP fell by 0.5%. The Finance Ministry reported raising some UAH 1bn at its regular domestic bond auction on Tuesday (Sept 10), although the sales were obviously to state-owned banks, and were executed at non-market yields for 5-year UAH-denominated bonds of 14.25%. Benchmark Ukraine-23s slipped 0.5% to end at 84.9/85.5 (10.0%/9.9%) and medium-term Ukraine-16s fell 0.5% to 91.0/92.0 (9.9%/9.6%). Short-term Ukraine-14s traded at 99.2/99.8 (9.1%/8.2%). Corporate issues were mixed. Metinvest-18s declined by 0.9% to close at 93.0/94.0 (10.8%/10.4%), while most other major liquid issues were little