Fixed Income
Ukrainian sovereigns finally snapped their 4-week losing run, with quotes for benchmark 10-year notes rebounding by 4.6% to 88.2/89.5 (9.4%/9.1%). The June emerging market bond sell-off, which saw a sharp spike in Ukraine’s 5-year CDS from 700 bps to 930 bps, was unrelated to any country-specific factors and was triggered solely by an across-the board rise in bond yields; by early last week it was clear to investors that most issues had become oversold. The Ukrainian CDS has now fallen back to 815 bps. The current spread of Ukraine’s benchmark 10-year debt to US Treasuries stands at 670 bps. Short term Ukraine-14s recovered by 1.1%, closing at 99.1/99.9 (9.0%/8.0%). Medium term Ukraine-17s added 1.2%, ending at 91.7/92.7 (9.1%/8.8%). Quotes for top corporate issues also moved higher, with Metinvest-18s climbing 2.2% to 92.3/94.1 (10.9%/10.4%) and DTEK-18s adding 2.1% to close at 93.2/95.0 (9.7%/9.2%). The issues of state-owned banks were mixed, as OschadBank-18s rose 2.3% to 89.8/91.
