Ukraine: over for Yanukovich? Bondholders seem to think so | beyondbrics:
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This is Ukraine’s $1bn sovereign bond maturing on June 4:
Source: Thomson Reuters
As bond yields soared, the Ukrainian hyrvnia slumped and CDS spreads widened on Friday as the country’s political crisis entered a new phase.
An advisor to Vladimir Putin, Russia’s president, warned Viktor Yanukovich of Ukraine he must suppress protests in the country or risk losing power. The hard line from Moscow came as Yanukovich himself – who had gone on sick leave on Thursday – signed into law an amnesty for protesters and a repeal of anti-protest laws. Both moves had previously been rejected by opposition leaders as they were conditional on protesters giving up control of buildings in central Kiev.
Earlier, John Kerry, US Secretary of State, told reporters in Berlin that Ukraine’s opposition had the support of president Barrack Obama.
The hyrvnia – usually firmly controlled by Ukraine’s central bank – was trading at 8.61 to the dollar on Friday after closing on Thursday at 8.40. Against the euro, it weakened to as much as 11.68 from 11.38 on Thursday, reaching its weakest level since August 2011.
The spread on a 5-year CDS rose to 1,012 basis points, meaning the cost of insuring against default in the next five years was more than 10 per cent of the debt insured, approaching levels at the height of the first wave of Ukraine’s recent crisis in December.
The yield on Ukraine’s $1.25bn bond maturing in April rose above 10 per cent. The yield on its $1bn bond maturing on June 4 – barely four months from now – rose to 15.4 per cent, suggesting investors have lost confidence in a $15bn bailout from Moscow and in the survival of the Yanukovich administration.
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