Fixed Income

November 09, 2020

Quotes for Ukrainian sovereign Eurobonds rallied for the second week in a row, finding aggressive purchases from risk-tolerant investors who cheered the US presidential election victory of Joseph Biden over incumbent Donald Trump. Big gains were seen despite a national budget deficit projected at 6.0% of GDP for 2021. Meanwhile, cooperation with the IMF is on hold, as only 4 out of 10 structural requirements have been implemented so far in relation to the approval of the next payout from the lender. The Ukraine-28s issue advanced by an impressive 4.5% to 113.4 (7.6% YtM), and medium-term benchmark issue Ukraine-25s was similarly up by 4.3% to 106.5 (6.3% YtM). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) rose 2.9% to 89.8 cents on the dollar. Preliminary estimates from the Economics Ministry said that Ukraine’s GDP dropped by 3.6% YoY in 3Q20 and by 5.5% YoY in 9M20.