Fixed Income
Quotes for Ukrainian sovereign Eurobonds corrected last week after their firm upward move to start off 2017 amid some concerns about the arrival date of the next IMF disbursement. However, we assume this was more of a technical correction than a fundamental one, as the domestic economy appears to be on a recovery track. Meanwhile, the government said it has started an internal restructuring of domestic debt which is held by the National Bank in the form of UAH-denominated bonds. The reprofiling of around 65% of this domestic debt is a technical move aimed at cutting national budget spending on servicing the UAH 382bn (USD 14bn) bonds held by the NBU. The Ukraine-2027 long-term benchmark issue declined by 0.6% last week to close at 95.5/96.4 (8.4%/8.3%), and the shortest outstanding sovereign issue, Ukraine-19s, lost 0.7% to end at 100.8/101.8 (7.4%/7.0%). The generally more volatile VRI derivatives (linked to Ukraine’s future GDP performance) fell 2.4% to close at 30.3/31.30
