Fixed Income
Quotes for Ukrainian sovereign Eurobonds rose last week following surprisingly impressive preliminary data indicating that the country’s GDP grew by 4.6% YoY in 4Q16. Positive sentiment also came from a USDA report that said Ukraine’s grain export forecast had been increased by 1.5mn tonnes to 40.4mn tonnes in the 2016/17 agricultural year (July-June). The two factors may actually be related, as the bump in 4Q growth could be due to figures that raise the estimate of Ukraine’s national crop harvest totals. The situation also looked better on the Donbass front, with relative calm returning to the hotspot of Avdyivka after the previous week’s heavy fighting. The benchmark Ukraine-27s bonds rose by 2.3% to 94.5/95.5 (8.6%/8.4%) and the shortest outstanding sovereign issue, Ukraine-19s, edged up 0.4% to 100.0/100.5 (7.7%/7.5%). The VRI derivatives (linked to Ukraine’s future GDP performance) gained 0.8% to close at 30.0/31.0 cents on the dollar.
