Fixed Income
Ukraine’s sovereign Eurobonds experienced a wild ride last week, first gaining sharply on Monday (Feb 17) on the promise of a USD 2bn cash injection from the Russian government, then plummeting on the shocking street violence of Tuesday, Wednesday, and Thursday before rising again on Friday after news of an EU-brokered power-sharing deal between President Yanukovich and the opposition (which then precipitated a stunning collapse of the Yanukovich regime over the weekend). Ukraine-23s, the country’s longest benchmark issue, rose by 2.6% to close at 84.2/86.2 (10.2%/9.8%), while at the short end of the curve, sovereigns due in June ended flat at 96.0/97.0 (23.2%/19.2%). At the peak of the violence, Standard & Poor`s cut Ukraine’s credit rating further by one notch to CCC; however, we suspect that the departure of Yanukovich and the possibility of a quick Western aid package may prompt S&P to reverse its decision.
