Ukraine Bond Repayment Belies Gutted Economy: East Europe Credit - Bloomberg

Ukraine Bond Repayment Belies Gutted Economy: East Europe Credit - Bloomberg:



"As Ukraine repays its $1 billion dollar bond, sentiment for the nation’s notes is souring with the economy withering amid fighting between government forces and pro-Russia separatists.



The yield on the July 2017 note rose 19 basis points in the past four days to 9.72 percent yesterday as the government cracked down on rebels in Donetsk and Luhansk in Ukraine’s industrial heartland in the east. Optimism that the country would avoid war with Russia spurred an 8.7 percent return for its dollar-based securities in May, the biggest gain among 56 emerging markets tracked by Bloomberg.



While an International Monetary Fund bailout is helping the country repay the dollar note maturing today, the European Bank for Reconstruction and Development forecasts the economy will shrink 7 percent this year after the government pledged to lower its budget deficit to win the aid. Russia, which annexed Ukraine’s Crimea peninsula in March, has given the country until June 9 to prepay for natural-gas supplies or face a cutoff.

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