Fixed Income
Quotes for Ukrainian sovereign Eurobonds were lower on more profit-taking last week, as investors still appear unsatisfied with the pace of the country’s economic recovery. On the positive side, there has been some momentum toward a political solution to the Donbass conflict in recent weeks, with weapons pullbacks and top-level talks between German Chancellor Merkel and Russian President Putin on stabilizing the ceasefire. The Kremlin said Merkel and Putin had agreed on a schedule for future contacts about Ukraine’s conflict under a format that would bring together the leaders of Ukraine, Russia, Germany, and France. Ukraine-2019s, the shortest outstanding sovereign issue, edged down 0.6% to 99.0/99.5 (8.1%/7.9%). The 10-year benchmark, Ukraine-26s, lost 1.0% to close at 94.8/95.5 (8.5%/8.4%). The current yields for Ukrainian sovereigns on the secondary market still look too high for the government to be able to issue new Eurobonds. The VRI derivatives (linked to Ukraine’s future
