Fixed Income

March 09, 2021

Ukrainian sovereign Eurobonds ended lower last week, as the risk assessment of holding the country’s debt worsened due to repeated delays in the IMF support program. Ukraine was supposed to get USD 700mn from the IMF last autumn and USD 2.2bn this year, but the program has been suspended. After the IMF monitoring mission ended its review in February without allocating any new money, the next possibility for Kyiv to receive the USD 700mn is in June. This means that the government is hoping to reach a staff-level agreement on the loan by late May. Reports are that ongoing problems with the High Council of Justice (judicial reform) and the National Anti-Corruption Bureau (NABU) have hindered the negotiations with the IMF. The actively traded Ukraine-28s issue fell 2.4% to 115.7 (7.3% YtM) and medium-term Ukraine-25s declined by 1.1% to 108.7 (5.6% YtM). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) decreased by 1.8% to close at 108.8 cents on the doll