Fixed Income
Ukraine’s sovereign Eurobonds lost more ground last week despite a 1-day jump on Tuesday (Jan 28) following the resignation of Prime Minister Nikolay Azarov. The selloff then resumed as Russia responded by suspending the next disbursement of its bailout for Ukraine until the appointment of a new head of government. The Finance Ministry had been expecting to receive USD 2.0bn from Moscow by the end of January, but this tranche is now on hold. A warning on investing in Ukrainian bonds also came from Standard & Poor’s, which downgraded the country’s sovereign rating by one notch, from B- to CCC+, while keeping the long-term outlook negative. Benchmark Ukraine-23s fell by 3.9% to 85.4/86.4 (10,0%/9.8%), and medium-term Ukraine-17s suffered a 4.1% pounding to end at 86.5/88.5 (11.2%/10.5%). Short-term papers with maturity in June declined by 1.4% for the second week in a row, closing at 97.4/98.9 (16.1%/11.3%).
