Fixed Income

January 13, 2020
 

Ukraine’s sovereign Eurobonds demonstrated a solid rise in the first full week of trading after the new year. News that the country’s national budget deficit came in lower than anticipated for 2019 provided some additional confidence in Prime Minister Oleksey Honcharuk’s government. The deficit was reported at UAH 81bn (USD 3.2bn), which implies roughly 2.0% of GDP. The longest outstanding Ukrainian sovereign bonds with maturity in 2032 advanced by 3.1% to 107.9/108.7 (6.4%/6.3%), and medium-term benchmark Ukraine-24s added 1.1% to 110.0/110.9 (6.2%/6.0%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) gained 3.1% to close at 98.0/99.0 cents on the dollar, a fresh historical high; the papers have never traded above par since their issue more than four years ago.