Fixed Income
Although quotes for Ukraine’s conventional sovereign Eurobond issues were essentially flat last week amid low trading activity, the so-called VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) continued to attract considerable investor interest. The VRIs rose 1.6% to 46.0/46.8 cents on the dollar, with their gains since March now having reached a whopping 50%. JPMorgan currently estimates the fair value of the VRIs, which could begin paying out redemptions as soon as 2021, at closer to 80 cents. Investors who hold the notes can theoretically receive a payout twice a year between 2021 and 2040, with the amount determined by the pace of GDP growth in Ukraine. In Ukrainian internal developments, the National Bank launched a public consultation on the legislative amendments required for foreign currency market liberalization. The new model of currency regulation should make the repatriation of capital easier for foreign investors. Ukraine’s capital controls, w
