Fixed Income

May 02, 2019

Ukrainian sovereign Eurobonds sold off heavily last week on concerns that the country might not receive a previously-expected USD 1.3bn loan tranche from the IMF this month. Ukraine has a tough debt repayment schedule this year, which includes USD 1.6bn in redemption and debt servicing in foreign currency in May alone. An IMF mission is scheduled to arrive to Kyiv in the middle of May, but might wait until incoming president Volodymir Zelenskiy announces his economic team before green-lighting the funds. Ukraine’s current IMF deal is for USD 3.9bn in three installments. The benchmark long-term issue, Ukraine-28s, slumped by 3.1% over the week to close at 98.4/99.2 (10.3%/10.1%) and the longest outstanding issue, Ukraine-32s, similarly dropped by 3.1% to 88.5/89.3 (9.0%/8.9%). Meanwhile, the short-term Ukraine-20s were unchanged at 95.5/96.3 (9.1%/8.9%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) fell 2.7% to 64.0/65.0 cents on the dollar.