Fixed Income

November 13, 2017
 

Quotes for Ukrainian sovereign Eurobonds declined last week following an overall correction in emerging markets, the main driver of which is a tightening monetary policy environment. The Federal Reserve has a 90% chance of raising US interest rates next month, futures prices suggest, while the Bank of England lifted its main rate last week for the first time in 10 years. The European Central Bank, while still providing monetary stimulus, is expected to cut its monthly bond purchases in half starting in 2018. Ukrainian debt has been one of the best performing sovereigns so far this year, delivering a 14% return through October and easily beating the average 4% gain for fund investing across the market. Ukraine’s benchmark 10-year sovereigns declined by 0.8% last week to 102.4/102.9 (7.4%/7.3%), and medium-term sovereigns with maturity in 2023 fell 1.3% to 105.1/106.1 (6.7%/6.5%). The shortest outstanding issue, Ukraine-19s (due in 22 months from now), inched down 0.3% to 105.0/10