Fixed Income
Ukrainian sovereigns got hammered last week after armed pro-Russian paramilitary groups escalated the tension in Eastern Ukraine by seizing government buildings in several major cities. As a result, Moody’s downgraded Ukraine’s credit rating to Caa3 on doubts that the new Kyiv government will be able to bring the political situation under control. The agency also cited an expected rise in Ukraine’s debt-to-GDP ratio to as much as 60% by end-2014 from around 40% at the start of the year as a negative factor influencing the sovereign rating, and said its outlook for the country is negative. The hryvnia plunged by nearly 15% against the dollar, and Ukraine’s longest outstanding Eurobond issue, due in 2023, fell 4.5% to close at 88.5/93.3 (9.4%/8.6%); medium-term Ukraine-17s were down by 3.7% to 90.0/91.0 (10.1%/9.8%).
