Fixed Income

November 04, 2019

Quotes for Ukrainian sovereign Eurobonds finished higher last week after the US Federal Reserve met the expectations of global investors by lowering its key rates by 25 bps into the range of 1.50-1.75%. It was the third rate cut this year. In Ukraine’s macroeconomic news, the National Bank released a preliminary estimate that the country’s GDP grew by 3.5% YoY in 3Q19 and forecasted that the growth in 4Q19 will be 3.3% YoY. GDP growth in the third quarter was mainly driven by consumer demand amid a significant improvement in consumer sentiment, higher wages, and pensions. Although the longest outstanding Ukrainian Eurobonds with maturity in 2032 were essentially flat at 103.8/104.5 (6.9%/6.8%), Ukraine-28s, which are viewed as the benchmark long-term papers, jumped by 3.9% to 118.5/119.3 (7.1%/7.0%). The medium-term benchmark Ukraine-24s were also flat at 108.8/109.5 (6.7%/6.6%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) rose by 1.6% to 93.5/