Fixed Income

June 15, 2020

Ukraine’s sovereign Eurobonds last week continued their nearly-uninterrupted rise which began in early May. Kyiv finally received a loan disbursement of USD 2.1bn from the IMF, with the approval unlocking additional support from the EU and the World Bank for a total amount of USD 2.7bn. Moody’s international rating agency has upgraded the rating of the Ukrainian government to B3 from Caa1 with a stable outlook amid the improved short-term financing and the decrease in external vulnerability after the IMF green light. The longest outstanding issue, Ukraine-32s, gained 1.5% to 99.9/100.9 (7.4%/7.3%) and medium-term Ukraine-25s gained 1.6% to 103.1/104.1 (7.2%/6.9%), as valuations continue to move back toward the pre-COVID levels of early 2020. The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) rose by 1.7% to 90.5/92.5 cents on the dollar.