Fixed Income
Ukrainian sovereign Eurobonds saw a substantial rebound last week on improving global risk appetite, despite growing uncertainty over the country’s ability to refinance its external debt in the medium term. According to our estimates, Ukraine is obliged to repay USD 1.83bn to foreign creditors by the end of this year, with USD 1.61bn of this amount due to the IMF. In 2014, the country’s total redemptions and servicing costs of external debt are estimated at USD 5.9bn, compared to USD 8.5bn for 2013. Fitch Ratings said that Ukraine has one of the lowest external liquidity ratios among ‘B’ rated sovereigns, and emphasized that this is a key credit weakness. The latest data on the National Bank’s foreign reserves indicated that the reserves held steady near USD 21.6bn in September, mainly thanks to a USD 750mn loan to the Ukrainian government from Russian state banks.
