Fixed Income
Ukraine’s tenuous political situation, marked by ongoing tensions in the eastern provinces, continued to weigh on the country’s Eurobonds last week. Quotes for the long-term benchmark Ukraine-2023 issue declined by 1.9%, ending at 86.5/91.8 (9.8%/9.0%), as a deal to ‘de-escalate’ the conflict reached in Switzerland failed to convince skeptical investors. The agreement said that all “illegal military formations” in Ukraine must be dissolved, and that those occupying government buildings must leave them; in our view, these provisions are unlikely to be enforced by either the pro-Russian side in Donetsk or the Ukrainian side in Kyiv. Meanwhile, Russian Foreign Minister Sergey Lavrov insisted his country has no desire to send troops into Ukraine, even as Kyiv and Washington insist that Russian special forces are already on the ground in Donetsk oblast. Domestic economic data released last week was not encouraging, with the fall in industrial production accelerating from 3.7% YoY in Februar
