Fixed Income

May 23, 2016

Ukrainian sovereign Eurobonds were lower last week, with the benchmark 10-year issue losing 2.1% to close at 91.0/91.8 (9.1%/9.0%). News that Fitch affirmed the country’s rating at ‘CCC’ instead of upgrading had a negative impact on investor sentiments. The agency said the rating reflects Ukraine’s lack of progress on its reform agenda. Meanwhile, Fitch expects the country’s foreign reserves to rise to USD 17.7bn by end-2016, assuming that most disbursements from international partners (USD 8.0bn in total, of which USD 5.2bn is IMF disbursements) go ahead as planned. Failure to secure all the planned disbursements would not damage Ukraine’s capacity to meet its external debt redemptions in the near term, but would threaten hryvnia stability and macroeconomic recovery.