08 Января 2019

Ukrainian sovereign Eurobonds started the new year in negative territory, with the long-term benchmark yield touching 11% for the first time since the 2015 restructuring, amid a global trend for yields to move higher based on views of the US Treasury curve and higher inflation. In Ukraine-related news, there was a batch of macroeconomic data which did not inspire investors. The country’s overall steel production declined by 2% YoY to 21.1mn tonnes in 2018, failing to rebound from 2017’s big 12% slide (which had been related to the loss of steel output from separatist-controlled territory). Another unpleasant fact was that Russian natural gas volumes piped via Ukraine to European consumers fell by 7% YoY in 2018 to 86.8 billion cubic meters. A complete halt to Russian gas transit could expose Ukraine to further disruptive activities by the Kremlin. Currently more than a third of Russia’s gas exports to the EU cross Ukraine, but Moscow has said it wants to bypass Ukraine by building new pipelines.