Fixed Income

September 23, 2019

Ukrainian Eurobonds corrected for the third week in a row, with the latest news that there was little progress in Ukraine’s negotiations with Russia on a natural gas transit contract for 2020 having a negative influence on investors. A round of the EU-Ukraine-Russia trilateral gas talks in Brussels between the Russian and Ukrainian economics ministers took place on Sept 19. The duration of a future contract is crucial for Ukraine’s budget planning and for investment into the country’s transit system. The longest outstanding Ukrainian Eurobonds due in 2032 decreased in price by 0.9% to 100.5/101.3 (7.3%/7.2%), and medium-term Ukraine-24s shed 0.4% to 110.2/110.9 (6.4%/6.2%). The debt papers of state natural gas giant NaftoGaz with maturity in 2024 were unchanged at 105.9/106.5 (5.7%/5.6%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) were flat for the week at 95.0/97.0 cents on the dollar.