Fixed Income
Ukraine’s sovereign Eurobonds finished last week slightly lower, as positive news on Friday (Dec 25) about Parliament’s approval of an IMF-compliant 2016 national budget arrived too late to affect trading amid the Western Christmas holiday. President Poroshenko and Prime Minister Yatseniuk, who lead the two main coalition parties, found enough votes to pass the bill despite Yulia Tymoshenko’s Batkivschyna party refusal to lend its support. Parliament also adopted crucial tax amendments clearing the way for a resumption of IMF lending, with the program mandating a deficit target of 3.7% of GDP for 2016. With the IMF’s support, the hryvnia has a chance to see only moderate devaluation next year, while without such support, devaluation could be uncontrolled, ruining the tentative economic stabilization achieved in 2H15. Ukraine’s foreign currency reserves now stand at USD 13bn and could increase to USD 18bn by the end of next year.
