Fixed Income

December 26, 2018

Quotes for Ukrainian sovereign Eurobonds had no reaction to news that the country received a long-awaited disbursement of USD 1.4bn from the IMF. The new 14-month program replaces the more ambitious USD 17.5bn assistance package that was frozen last year because of insufficient reform efforts. To get the new payout, Kyiv was forced to raise heating tariffs for households. The country could have come uncomfortably close to default next year without any IMF and IMF-linked Western donor support. External debt repayment and servicing are estimated at USD 5.1bn in 2019 while total debt servicing for the country is USD 12.2bn next year and around USD 10bn in 2020. Ukraine’s benchmark 10-year Eurobonds shed 2.2% last week to close at 92.9/94.0 (10.9%/10.7%), and the Ukraine-32s issue declined 1.5% to 79.5/80.5 (10.2%/10.0%). The medium-term sovereigns with maturity in 2023 were down 1.6% to 89.6/90.6 (10.6%/10.3%) and the VRI derivatives (linked to Ukraine’s future GDP growth with expiration