Fixed Income

December 14, 2020

Ukrainian sovereign Eurobonds gained last week as the Finance Ministry placed a new international issue for USD 600mn over 12 years. The placement attracted plenty of bids, even at the rather moderate offered yield of 6.2%. Previously this year in July, Ukraine issued a 13-year Eurobond for USD 2.0bn at 7.25%. Meanwhile, there was news that the European Commission has disbursed EUR 600mn in low-interest macro-financial assistance to Ukraine. The loan should help the country to balance the national budget this year as its deficit was estimated at near 8% of GDP after the COVID crisis emerged. The long-term benchmark Ukraine-32s issue rose by 0.6% to 110.6 (6.0% YtM), and medium Ukraine-25s gained 0.5% to close at 112.5 (4.8% YtM). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) increased by 2.1% to 103.8 cents on the dollar, another fresh all-time high for the papers.