Ukraine Bond Drops Most in Month as Plane Downing Boosts Tension
Ukraine’s benchmark Eurobonds fell
the most in a month as the government said Russian forces may
have downed one of its military planes, signaling Kyiv’s bid to
wipe out pro-Russian insurgents faces mounting headwinds.
The yield on the dollar note maturing in July 2017 rose 23
basis points to 8.46 percent, the biggest increase since June 16
on a closing basis. The hryvnia weakened less than 0.1 percent
to 11.71 per dollar by 1:55 p.m. in Kyiv.
A “powerful weapon” not previously used by the
separatists, probably from inside Russia, downed the transport
plan, according to Defense Minister Valeriy Geletey. Ukrainian
forces are trying to encircle insurgents who retreated to the
mainly Russian-speaking cities of Luhansk and Donetsk as the
U.S. pushed for deeper sanctions to stop assistance to
separatists.
“The tension between Russia and Ukraine began to re-escalate,” Tatha Ghose, a London-based analyst at Commerzbank
AG, wrote in an e-mailed report today. “The key question now is
whether or not the situation constitutes a bigger headache for
Russia — all eyes on Russia and possible stage 3 sanctions —
than for Ukraine.”
Ukrainian forces are still searching for six people from
the aircraft, while two have been captured by pro-Russian
rebels, military spokesman Vladyslav Seleznyov said on Channel
5. Igor Konashenkov, a spokesman for Russia’s Defense Ministry,
couldn’t be reached for comment on his mobile phone.
To contact the reporter on this story:
Andras Gergely in Budapest at
agergely@bloomberg.net
To contact the editors responsible for this story:
Wojciech Moskwa at
wmoskwa@bloomberg.net
Stephen Kirkland, Chris Kirkham