Fixed Income
Ukrainian benchmark sovereigns fell notably last week, although for a change, the drop was mostly due to negative external risk sentiments rather than domestic political factors. Financial markets looked fragile after the IMF downgraded its global growth forecast for both this year and next. The organization now expects world growth to come in at 3.3% in 2014, down 0.1 p.p from its forecast in July, while in 2015, it sees growth of 3.8%, down 0.2 p.p. from earlier expectations. The IMF also said it is expecting a deep recession in Ukraine in 2014, with the effects moderating in 2015, depending on a positive resolution of the country’s natural gas shortage. Ukraine-23s, the longest outstanding issue, slid by 3.5% to close at 80.0/81.0 (11.2%/11.0%). Ukraine-17s lost 2.0% to 83.3/84.8 (13.5%/12.9%) while short-term Ukraine-15s due next September edged up 0.6% to 88.9/91.4 (20.4%/17.1%).
