25 Февраля 2019

Ukrainian sovereign Eurobonds demonstrated a strong appreciation over the week as it seems like booming iron ore prices gave investors more confidence in Ukrainian economic outlook. The benchmark 62% Fe iron ore price surged by 14% YtD to USD 88 per tonne. Ukraine’s vertical integrated steel sector should benefit from the higher commodity price. In overall Emerging market currencies and bonds began 2019 by rallying. Emerging currencies have gained an average of 0.7% versus the US dollar since the start of the year. Going forward, emerging market debt and currencies should gain amid the search for yield. In Ukrainian related news, Agrarian Policy Ministry reported that the country’s agri-food exports rose by 4.8% YoY to USD 18.6bn in 2018, accounting for 43% of total merchandise exports in the period. Ukraine’s 10-year benchmark Eurobonds added 3.7% to 100.4/100.9 (9.7%/9.6%) and medium-term Ukraine-24s rose by 3.3% to 93.8/94.8 (9.2%/9.0%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) grew by 4.1% to 63.9/64.9 cents on the dollar.