Fixed Income

March 16, 2017

Ukrainian Eurobonds were soft again last week as the trade blockade of the Donbass separatist-occupied territories by uncontrolled nationalist paramilitaries continues to be the main political issue in the country. The blockaders also tried to set up a new blocking point in Kharkiv province at the border with Russia proper, but were rebuffed by local citizens and police. Prime Minister Groysman said that the blockade, by so-called “pro-Ukrainian” paramilitaries and MPs hostile to both Russia and the Kyiv government, is costing Ukraine some USD 125mn per month. A government decree that specified procedures of how to move goods across the front line has brought little certainty about whether the new rules will work on the ground. In clearly positive news for Kyiv which was already largely priced into sovereigns, there was an announcement that the IMF board will meet on Mar 20 to review a USD 1bn loan payout to Ukraine. The benchmark 10-year Ukraine-27s bonds declined by 1.6% to close at