Fixed Income
Quotes for Ukrainian sovereign Eurobonds ended generally higher last week as bargain-hunters snapped up issues after three straight weeks of declines. News that the Ukrainian government decided to suspend preparations for the planned signing of a free trade agreement (AA/DCFTA) with the European Union appeared to have a mixed and difficult-to-gauge effect on the bond market. The Finance Ministry raised a solid USD 300mn at its regular Tuesday bond auction by selling 3-year USD-denominated bonds at 7.75%, probably to state-owned banks, indicating that the government will be able to refinance its short-term obligations. According to our estimates, MinFin needs only USD 128mn to service its external debt through year-end. We estimate the government’s total external redemptions in 2014 at USD 5.6bn, compared with USD 8.5bn in 2013.
