Fixed Income
Ukraine’s brand-new restructured sovereign Eurobond issues rallied in their first week of trading, as both Fitch and Moody’s upgraded the country’s credit rating to CCC and Caa3 respectively. The settlement of the restructuring of USD 15bn sovereign Eurobonds eases Ukraine’s debt-service requirements and strengthens the country’s external liquidity, the rating agencies said. The longest outstanding new issue, Ukraine-27s, rose 2.3% to 93.8/94.5 (8.6%/8.5%), and Ukraine-19s added 2.2% to 97.3/98.0 (8.6%/8.4%). The so-called VRI (value recovery instrument) securities issued in exchange for the USD 3.0bn principal write-down, jumped in price by 25% from 40 to 50 cents on the dollar. The VRI is a GDP-linked derivative with 20 annual payments from 2021 to 2040 which would be paid out in case Ukraine’s real GDP rises above 3.0% YoY in each particular year.
