Fixed Income

May 08, 2018
 

Ukrainian sovereign Eurobonds declined in value amid a broad sell-off after Fitch Ratings assigned a ‘B-’ Long-Term Foreign-Currency Issuer Default Rating for the country which was at least one notch below expectations. The rating agency highlighted Ukraine’s high public debt burden and structural weaknesses. In other news, there was information that unusually hot and dry weather across almost all Ukrainian regions has not yet damaged grain crops but there is no reason to expect a bumper harvest of early spring grains this year. Ukraine is expected to harvest around 62mn tonnes of grain in 2018. The country’s longest outstanding Eurobonds, Ukraine-32s, dropped by 2.8% to 89.7/90.7 (8.6%/8.5%) and the shortest outstanding issue maturing in 14-months sank 0.8% to 102.6/103.1 (5.7%/5.3%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) lost 0.7% to close at 67.1/68.1 cents on the dollar.