Fixed Income
Ukrainian sovereigns were mixed last week, with the most notable development being a sharp fall in Ukraine-19s, the shortest outstanding issue, which slumped 7.2% to 90.0/90.8 (11.6%/11.3%). We assume that this was driven either by aggressive selling activity of a large bondholder or by the negative speculative reaction to Britain’s EU exit vote. Nevertheless, other Ukrainian debt papers were higher for the week. The benchmark 10-year bonds, Ukraine-26s, added 1.3% to 94.3/95.0 (8.6%/8.5%) and Ukraine-20s rose 2.2% to 97.9/98.7 (8.4%/8.1%). The VRI derivatives (linked to Ukraine’s future GDP performance) edged up 0.8% to 32.0/33.0 cents on the dollar. Among major domestic economic news, the NBU continued to cut its key refinancing rate, which was decreased by 150 bps to 16.50% on Jun 23. Slowing inflation and a rise in UAH liquidity were the primary reasons behind the NBU rate decision. On the statistics front, UkrStat’s industrial output figures for May were not impressive, as the IP
