Fixed Income

August 20, 2018

The market value of Ukrainian sovereign Eurobonds remained under pressure last week despite encouraging information that an IMF monitoring mission is due to arrive in the country in early September, which is a sign that Kyiv could finally get the long-delayed USD 1.9bn loan tranche. A resumption of the IMF support program should improve Ukraine’s ability to attract funding on international capital markets for servicing peak payments on its public debt in 2019-20. In particular, the World Bank is preparing a USD 650mn policy-based guarantee for Ukraine which depends on successful review of the IMF program. The Ukraine-27s issue declined by 1.2% to 91.2/92.1 (9.2%/9.0%) and medium-term Ukraine-23s were 0.2% lower at 97.9/98.7 (8.3%/8.1%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) slumped by a notable 4.8% to 55.5/56.5 cents on the dollar.