Fixed Income

June 06, 2018

The market value of Ukrainian sovereign Eurobonds fell notably last week after government officials admitted that the Finance Ministry might try to enter foreign capital markets with a new bond issue that would represent a more expensive borrowing than previous ones. In another internal development that was not encouraging, Prime Minister Volodymir Groysman took away control over the State Fiscal Service from the Finance Ministry; this was a setback for the Ministry’s head Oleksander Danyliuk, who is well-respected by the IMF and foreign investors. Danyliuk said the move would be an impediment for reforming the State Fiscal Service. The longest outstanding Ukrainian Eurobonds, Ukraine-32s, lost 2.8% to close at 91.4/92.4 (8.4%/8.3%), and medium-term Ukraine-23s were down by 1.6% to 100.3/101.0 (7.7%/7.5%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) declined by 1.7% to close at 69.4/70.4 cents on the dollar.