Fixed Income

June 25, 2018

Ukrainian sovereign Eurobonds continued to trend lower last week amid increased volatility on emerging-debt markets, as tariff tensions between the United States and China escalated. Any trade war lasting longer than a few days would represent a clear downward risk for the world economy. The benchmark Ukrainian Eurobonds with maturity in 2027 were down by 0.3% to 93.7/94.7 (8.8%/8.6%), and the longest outstanding issue Ukraine-32s lost 0.3% to close at 87.8/88.8, with their yield approaching 9%. The shortest bonds, which are due for redemption in September 2019, declined by 0.9% to 100.6/101.1 (7.2%/6.7%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) were little changed at 64.1/65.1 cents on the dollar.