Fixed Income

June 18, 2018

Quotes for Ukrainian sovereign Eurobonds fell sharply in an environment of rising interest rates after the US Federal Reserve lifted its benchmark rate by a quarter point on Jun 13, the second hike in 2018. The Fed said that two additional increases can be expected later this year. The Fed’s benchmark rate was brought into a range of 1.75% to 2.00%. In the US bond market, investors showed signs of concern about higher inflation and faster rate hikes amid strong economic growth, with the yield on the 10-year US Treasury bond rising above 3% at midweek before correcting back a bit by Friday’s close. In Ukrainian-related developments, the European Parliament voted in favor of the third Macro-Financial Assistance program for Ukraine foreseeing the provision of EUR 1.0bn to the country. The loan conditions includes a mechanism for verification of companies’ true ownership and a well-functioning specialized anticorruption court in line with the recommendations of the Venice Commission.