RoboForex analyst: the rates of Ukrainian securities on international financial markets have stabilized
Since the end of February last year, the value of Ukrainian securities has reached historic lows. Holders of Ukrainian debt got rid of our government bonds, as the risk of default increased many times. The sentiments of market participants changed for the better, after the owners of 90% of Ukraine’s GDP warrants (debt securities, the interest on which is “tied” to the rate of economic growth) agreed to the proposal of the Ukrainian Cabinet to postpone payments and review the conditions for them.
A similar decision was made by the owners of Ukrainian Eurobonds, who granted a 24-month grace period for their repayment. This was reported by Andrey Goilov, RoboForex analyst.
Credit-default swaps of Ukraine CDS (b. p.). Source: dragon-capital.com
After the first and currently the only round of negotiations between the delegations of Ukraine and the Russian Federation in Belarus, the quotes of our country’s CDS credit-default swaps (a financial instrument for insurance against the default of the bond issuer) began to decrease. The graph shows their “collapse” to 64.39%. However, after the beginning of the conflict in the Donetsk and Luhansk regions, this indicator began to increase from the end of April, sometimes decreasing as part of the correction. After the successes of the Armed Forces of Ukraine in the Kharkiv region and near Kherson, the mood of investors improved significantly. The current values have long been higher than the record highs of 2015, when the ORDLO was active in hostilities and the Ukrainian delegation was negotiating the restructuring of the country’s external debt. As a result, the schedule has been static since mid-August last year.
Exchange rate of Eurobonds of Ukraine maturing in 2024 as of February 3, 2023 (%). Source: dragon-capital.com
The value of Eurobonds reached a historic low, falling to 17.0% of the face value. At the moment, the yield of these securities still remains at the “junk” mark of about 25.0%. The analyst believes that in 2024 the maturity dates for government bonds will be revised again, as the probability of a significant improvement in the economic situation by this time is very low. Ukraine, as now, will need to reduce the “debt burden” on the state budget.
On the cash foreign exchange market, the hryvnia against the US dollar was fixed below the level of 40.50, and the euro reached the level of 42.50. Further strengthening of the hryvnia in the medium term is unlikely. Problems in the energy industry will lead to a reduction in the volume of own production and an increase in demand for imported goods. The latter will put pressure on the hryvnia.
Source: Ministry of Finance
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