11 Июня 2019

Ukrainian sovereign Eurobonds moved solidly higher last week in line with the global trend after the market started to price in the possibility of an interest rate cut by the US Federal Reserve later this year. The futures market now shows that traders see a 72% chance of a rate cut at the Fed’s July 31 meeting, and a 23% probability of a rate cut at the June 19 meeting. The US central bank’s policy rate currently stands between 2.25% to 2.50%, while the 10-year UST note is trading at 2.08%, near its lowest levels since Sept 2017. In Ukrainian news, the Finance Ministry said it would try to issue bonds with a longer term and amortization payment schedule to lower refinancing risk. The country is facing peak payments on state debt: in 2019 – UAH 483bn (USD 17.6bn), in 2020 – UAH 492bn (USD 17.4bn), in 2021 – UAH 483bn (USD 16.4bn) and in 2022 – UAH 481bn (USD 16bn). In relative terms, state debt payments in 2019 are estimated at 12% of GDP and 52.7% of state budget revenues, while in 2020 this would be 10.8% of GDP and 47.9% respectively.