Fixed Income

February 15, 2021

Ukrainian sovereign Eurobonds were moderately lower last week after a negative signal from the IMF regarding the prospects of cooperation with the country under the current USD 5bn loan program. The IMF monitoring mission ended a “remote” review of the first disbursement to Ukraine without clearing the next tranche payout, stating that the conditions have not been met. The IMF insisted on more reforms, with the talks centering on strengthening governance of the National Bank, improvements to the regulatory framework for bank supervision, and policies to reduce the medium-term fiscal deficit. The IMF also voiced concern over the government’s decision last month to regulate household gas & heating prices instead of allowing them to be determined by the market. On paper, Ukraine was expected to receive USD 2.2bn in three equal tranches from the IMF in 2021, but it is clear that the program is running behind schedule.