Fixed Income

February 22, 2021

Quotes for Ukrainian sovereign Eurobonds were notably lower last week amid rising yields for the risk-free benchmarks as inflation expectations increased. US Treasury yields moved higher, with the 10-year Treasury yield hitting 1.3%, a level not seen since February 2020 before the start of the COVID crisis. Meanwhile, the yield on the 30-year US bond rose to 2.1%. Investors continued to watch for progress on President Joseph Biden’s proposed USD 1.9 trillion stimulus package in Congress, which could be a notable driver of inflation and thus weigh further on US government bond prices in the medium term. The long-term Ukraine-32s issue fell 2.0% to 106.4 (6.5% YtM) and medium-term Ukraine-25s shed 1.0% to 111.7 (4.9% YtM). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) declined by 1.1% to close at 111.3 cents on the dollar.