Fixed Income

November 16, 2020

Ukrainian sovereign and corporate Eurobonds remained on a positive trajectory last week in defiance of the negative global trend of rising COVID-19 cases, including domestically, as investors appeared to take the view that the crisis is eventually going to subside with the help of expected vaccinations. The government’s decision to impose the so-called weekend quarantine nationwide was harshly criticized by the business community. The general opinion is that a hard lockdown and the closure of most retail businesses over the weekend will do more harm than good. Long-term Ukraine-32s increased by 1.0% to 103.2 (7.0% YtM), and the medium-term benchmark issue Ukraine-25s grew by 0.8% to 107.4 (6.0% YtM). Notably, the VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) surged by 6.3% to 95.5 cents on the dollar.