Fixed Income

September 13, 2017

Ukrainian sovereign Eurobonds rose for a 4th consecutive week to open September, this time fueled by buying momentum after Prime Minister Volodymir Groysman stated that a new Eurobond placement is imminent. The Finance Ministry intends to refinance bonds maturing in 2019 to smooth out the medium-term debt servicing load. We assume that the new issue, a 10-year, will carry a yield of slightly below 7%. Strong risk appetite for emerging market debt should help Ukraine to attract at least USD 2bn in fresh financing. As an example, Tajikistan managed to raise USD 500mn in its debut on international markets by selling a 10-year bond with 7.125% coupon last week. Also, when Iraq attracted USD 1bn with a 5-year, 6.75% bond last month, the issue was six times oversubscribed despite being the first Iraqi sovereign without a US guarantee for more than a decade.