Quotes for Ukrainian sovereign Eurobonds were on the rise last week, increasing significantly amid positive information regarding the announced external support for Ukraine of nearly USD 60bn until 2027. The price of Ukraine-34s issue rose by 18% to 21 cents on the dollar (yield to maturity of 41%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) gained by 20% to 36 cents on the dollar.
Meanwhile, shares of Ukrainian companies experienced declines, with Ferrexpo (FXPO) falling by 3.1% to GBp 84.7, and Astarta (AST) shares dropping by 5.7% to PLN 29.10. The Ukrainian Exchange index lost 12% over the week due to the decline in CentrEnergo (CEEN) by 17% to UAH 4.40 per share. The volume of transactions on the Ukrainian Exchange remains minimal.
The primary placement of domestic government bonds on June 20 brought a solid amount of UAH 31.4bn to the central budget, including USD 244mn from the sale of dollar-denominated domestic government bonds at 4.8% and EUR 136mn from euro-denominated bonds at 3.25%. The 1-year UAH-denominated bond in the amount of UAH 720mn was placed at 18.3%. Medium-term three-year bond was offered with a yield of 19.75%.
In the local currency market, the hryvnia remains relatively strong. Over the week, the cash exchange rate strengthened by 0.3% to 37.20 hryvnia per dollar.
Global stock indices experienced declines throughout the past week. The S&P 500 lost 1.4%, while the MSCI EM composite index fell by 3.7%. Investors are concerned that the period of high interest rates will last longer than expected. The Bank of England surprised the market by raising the key rate by 0.5 percentage points from 4.5% to 5.0%, the highest level since 2008. The consensus forecast was for a rate increase to 4.75%.
POLITICS AND ECONOMICS
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