Fixed Income
Ukrainian sovereign Eurobonds continued their unprecedented rally that began back in late August after the Finance Ministry and group of private creditors reached an agreement on sovereign restructuring. Quotes for the benchmark Ukraine-23s issue advanced 3.9% last week to close at 80.0/81.0 (12.4%/12.1%). Finance Minister Natalia Jaresko made a presentation for investors on Friday (Oct 2) that provided new details on the debt operation, including information regarding the Value Recovery Instrument (VRI), which would provide upside to bondholders from 2021 to 2040 if Ukraine’s GDP growth exceeds 3%. MinFin has officially offered a direct exchange to Ukraine-15s holders involving new bonds with maturity in 2019, making it possible to estimate the yield of the issue. The current quotes for Ukraine-15s of 82.0/83.5 mean that the bonds are now trading at a premium above par after the agreed 20% principal haircut is taken into account. This suggests that the new 2019 issue will begin tradin
