25.01.2022, 13:23
Ukrainian Markets Fall Amid Threat of War
Source: OREANDA-NEWS
OREANDA-NEWS. Ukrainian sovereign eurobonds denominated in dollars have fallen in price by about 8% since the beginning of 2022, which is the worst result in emerging markets after Argentina, according to Bloomberg terminal data. In particular, the Ukrainian Eurobonds with maturity in 2033, amounting to $ 2.6 billion (issued in July 2020) in January, lost nearly 9%.
In November they are trading at a lower price than their nominal value, and by January 24 the discount to nominal value was almost 20%, i.e. the bond for which at maturity the Ministry of Finance of Ukraine will have to pay $1, is now on the market for only 81 cents. Accordingly, the yields on those bonds maturing in 2033 (the higher they are, the higher the market assesses the probability of default) reached 10.1% a year on Monday, Jan. 24.
However, although Ukrainian Eurobonds are now trading as if default is imminent, in fact they are not, according to emerging markets strategist at Vontobel Asset Management Carlos de Sousa. Ukraine's macrofinancial situation has significantly improved compared to 2014, the country's current account is close to balance, the hryvnya exchange rate is floating, and foreign exchange reserves are at a good level, the analyst wrote.
In November they are trading at a lower price than their nominal value, and by January 24 the discount to nominal value was almost 20%, i.e. the bond for which at maturity the Ministry of Finance of Ukraine will have to pay $1, is now on the market for only 81 cents. Accordingly, the yields on those bonds maturing in 2033 (the higher they are, the higher the market assesses the probability of default) reached 10.1% a year on Monday, Jan. 24.
However, although Ukrainian Eurobonds are now trading as if default is imminent, in fact they are not, according to emerging markets strategist at Vontobel Asset Management Carlos de Sousa. Ukraine's macrofinancial situation has significantly improved compared to 2014, the country's current account is close to balance, the hryvnya exchange rate is floating, and foreign exchange reserves are at a good level, the analyst wrote.
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