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Eavex Ukraine Fixed Income Weekly: Apr 3

Ukrainian Eurobonds were rather inactive last week amid a mixed news flow and general investor confusion about whether the country will manage to find a feasible energy alternative to coal from the occupied territories before the next winter season. However, there was a sharp rise in the country’s GDP-linked derivatives after JP Morgan wrote that these securities have been trading at only half of their fundamental value. In major news last week was the UK High Court’s decision to proceed with the Russian claim to Ukraine over USD 3bn debt without a trial. This means that the court rejected Ukraine’s argument about Russian military aggression as a basis for non-payment of the debt. However, positive and very important news for Ukraine was the re-inclusion of the country’s next loan installment on the agenda of the IMF’s board meeting today (Apr 3). Completion of the third review of the program will enable the disbursement of about USD 1bn, as well as Western assistance directly linked to maintaining IMF compliance.