Fixed Income

February 13, 2018
 

Ukraine’s sovereign Eurobonds suffered a notable contraction last week amid the pullback in global risk appetite and the recent decline in US bond prices. Until this week, emerging markets bonds had been untouched by the US bond market sell-off, but a catch-up was only a matter of time. In any case, US Treasuries now look oversold and could easily rebound. There were no local Ukrainian game-changing events to trigger a sell-off in Ukrainian sovereigns. The longest outstanding Ukrainian Eurobonds, Ukraine-32s, lost 3.3% to close at 95.9/96.7 (7.8%/7.7%), representing their highest yield since they were placed at 7.375% last September. Medium-term Ukraine-23s dropped by 2.1% to 105.2/105.9 (6.6%/6.5%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) declined by 3.0% to close at 64.0/65.0 cents on the dollar.