Fixed Income
Ukrainian sovereign Eurobonds were steady last week, mostly ignoring the widely-covered developments regarding the railroad blockade of the Donbass occupied territories by rogue nationalist paramilitaries. The blockade has already caused an energy emergency situation by interrupting coal supplies. President Poroshenko has chosen public relations over force in dealing with the ostensibly pro-Ukrainian paramilitaries, warning on television about the severe economic consequences of this action for the entire country. The radicals claim that they are trying to stop all trade operations between Ukraine and the DNR/LNR separatist-occupied territories. However, we suspect the blockade is intended for political and/or monetary gain, and we believe a solution will be found shortly. The longest outstanding sovereign issue, Ukraine-27s, were unchanged at 94.5/95.5 (8.6%/8.4%) while the shortest bonds, Ukraine-19s, edged up 0.2% to 100.3/100.8 (7.6%/7.4%). The VRI derivatives (linked to Ukraine’s
