"It’s not a downgrade, nor even a change in outlook, but a statement issued by Fitch Ratings on Monday is still a warning. Ukraine’s credit rating is under pressure and looking increasingly vulnerable.
Investors, you might think, already knew that. So it’s ironic that Fitch should speak out on a day when the yield on Ukraine’s benchmark 2023 bond fell to 9.86 per cent, down from a recent peak of 10.6 per cent on December 10, according to Thomson Reuters data. Why are investors so (comparatively) positive?
Source: Thomson Reuters
One reason – as Timothy Ash of Standard Bank and others have argued – is that they are ignoring the risk of cross-the-board default on Ukrainian government debt. As Ukraine’s inverted yield curve suggests, investors may believe trouble is round the corner but will be resolved in the longer term."
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