Fixed Income

September 09, 2019

Both sovereign and corporate Ukrainian Eurobonds racked up big gains last week on optimism that the newly appointed technocratic government will be able to deliver strong economic results. New Prime Minister Oleksiy Honcharuk announced his intention to finally open up an agricultural land market in the country, which should immediately attract massive investments in the farm sector. The longest outstanding Ukrainian Eurobonds due in 2032 surged by 4.5% to their highest-ever price of 102.2/102.9 (7.1%/7.0%), and medium-term Ukraine-24s added 2.5% to 111.0/111.7 (6.2%/6.0%). The EUR-denominated bonds with maturity in 2026 advanced by 3.2% to 109.5/110.2 (5.1%/4.9%), while the VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) jumped by 8.3% to 93.3/94.5 cents on the dollar on speculation that Ukraine’s economy will accelerate to 5% growth next year if the land reform measures are indeed implemented.