Fixed Income
Quotes for Ukrainian sovereign and corporate Eurobonds were volatile last week before finishing notably lower, as emerging markets bonds sold off globally. Higher-yielding emerging-market assets have been hit hard in recent weeks, as weakening growth outlooks for the EM world have fueled selling across the entire asset class. Ukraine’s 10-year USD 1.25bn sovereign issued in April (at 7.5%) has fallen to around 93 percent of par value from as high as 101 last month. JPMorgan’s EMBI Global index for dollar-denominated bonds is down by more than 5% over the past month, the biggest drop since 2008, on political unrest in Turkey, mining strikes in South Africa, and slower growth in China. Average yields on EM dollar bonds rose 80 bps over the past month to 5.4% on Jun 17, the highest in a year, according to data from JPMorgan. Last week alone, medium term Ukraine-17s were down 2.2%, ending at 94.5/95.5 (8.3%/8.0%). Quasi-sovereign Naftogaz-14s dropped 0.5% to 100.6/101.5 (9.0%/8.2%).
