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Ukrainian Eurobonds weekly comment

February 16, 2016 | Cbonds

Dmitry Churin, Head of Research, Eavex Capital:

Ukrainian sovereign Eurobonds ended notably lower for a second straight week, with the yield on the 10-year issue climbing above 10% for the first time after the country restructured its debt last October. The sell-off was triggered by fears that the IMF could freeze its Ukraine lending program due a lack of results in reducing corruption. Ukraine remains mired at 130th place on a frequently-cited list of 168 countries in the “Corruption Perceptions Index” published by the Transparency International NGO. Ukraine’s last IMF rescue also ended up on the rocks in 2011, due to a lack of reforms by the Yanukovich government, but the stakes are much higher this time as no fallback option exists.

Despite a late-week rally, Ukraine-26s still finished with a weekly decline of 2.0%, closing at 85.3/86.3 (10.1%/9.9%). The shortest outstanding bonds, Ukraine-19s, lost 0.8%, ending at 91.3/92.3 (10.8%/10.4%). The so-called VRIs (value recovery instrument linked to future GDP performance) got hammered, sliding 9.6% to 32.5/33.5 cents on the dollar.

Corporate debt papers saw light activity over the week but generally followed the downward trend in sovereigns. MHP-20s dropped by 3.0% to 83.0/84.1 (13.8%/13.4%) and DTEK-18s fell 2.4% to 40.0/42.0 (67%/64%).

Banking sector bonds came under pressure, as the hryvnia’s recent weakness is raising more concerns about the quality of loan portfolios. OschadBank- 25s lost 1.8% to 82.6/83.7 (12.9%/12.7%) and PrivatBank-18s ended down 3.0% to 63.0/66.0 (39%/36%).

Company: Ukraine

Full company nameUkraine
Country of riskUkraine

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