Fixed Income

March 26, 2018

Ukraine’s sovereign Eurobonds declined last week following the overall trend of rising yields for emerging-market debt. Ballooning fears of a global trade war hammered emerging markets, with dollar-bond spreads increasing to their highest level since November. The average yield spread over US Treasuries on the JPMorgan EMBI Global Diversified index widened to 302 bps, and the Ukrainian yield curve spread to US Treasuries reached 485 bps. The shortest issue, Ukraine-19s (due in just over 17 months from now) shed 0.4% to close at 103.6/104.2 (5.1%/4.7%), while the longest outstanding bonds, Ukraine-32s, fell 1.5% to 94.3/95.2 (8.1%/8.0%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) climbed 1.6% to 68.5/69.3 cents on the dollar after UkrStat revised the country’s economic growth upward from 2.1% to 2.5% for 2017.