Fixed Income

July 29, 2019
 

Ukraine’s sovereign Eurobonds enjoyed huge gains last week as investors were pleased to see that the country’s national parliamentary election resulted in an unambiguous victory for President Zelenskiy’s People’s Servant (SN) party, which won more than 250 seats in the 424-seat legislature. In economic news, the Finance Ministry said that Ukraine’s state and state-guaranteed debt increased by USD 2.03bn, or 2.6%, to USD 80.35bn in January-June 2019. We estimate Ukraine’s current debt to GDP ratio at 58%. The longest outstanding Eurobonds, Ukraine-32s, rose by a solid 3.9% to 99.7/100.5 (7.4%/7.3%) and the Ukraine-28s issue shot up by 6.0% to finish at 114.7/115.5 (7.6%/7.5%). Short-term sovereigns with maturity in 2020 ended unchanged at 100.0/100.8 (7.9%/7.1%). The generally more volatile VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) leaped by 13.6% to 82.3/83.3 cents on the dollar - the highest historical level for the papers since the first few day