Fixed Income

April 26, 2021

The hotly-traded Ukraine-28s issue rose 1.6% to 117.3 (6.9% YtM) and medium-term Ukraine-25s gained 1.0% to 107.7 (5.8% YtM). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) advanced by 1.7% to 103.6 cents on the dollar after a major US investment bank placed a BUY recommendation on this derivative instrument with a target price of 145 cents on the dollar. The Eurobonds of the state-owned railway operator UkrZaliznytsa (RAILUA-24s) declined by 0.4% to 101.4 (7.6% YtM) after S&P Global Ratings downgraded the company from “B-” to “CCC” on increased refinancing risk. S&P said that UkrZaliznytsa’s 2020 results were weak, as expected, on the back of lower cargo transportation volumes and limitations on passenger traffic due to COVID-19 disruptions. Freight revenue was down 10% and passenger revenue down 59% from 2019. The company’s net loss amounted to UAH 11.9bn (USD 442bn) in FY20 compared to a net profit of UAH 3.0bn in FY19.