Ukraine Bonds Extend Gain as Opposition Works Toward Aid Plan
Ukraine’s dollar bonds gained for a
second day as the opposition formulated plans to resolve the
country’s political crisis and western nations discussed an aid
deal for Europe’s riskiest sovereign.
Yields on the dollar-denominated debt due this June fell 17
basis points to 13.37 percent at 2:18 p.m. in Kyiv, according to
data compiled by Bloomberg. The cost of insuring the country’s
debt with credit-default swaps fell 13 basis points to 1,010,
according to CMA data. The hryvnia slumped to the weakest since
2009.
Ukraine’s opposition urged lawmakers today to curb the
powers of President Viktor Yanukovych, who snubbed a European
Union cooperation deal in November in favor of closer ties with
Russia. The European Union and the U.S. are considering aid for
Ukraine if a new government is formed, U.S. State Department
spokeswoman Jen Psaki said yesterday in Washington.
The prospect of western aid is “positive for sentiment
toward the country’s external debt as it continues to highlight
that Ukraine is able to benefit from the competing interests of
the West and Russia,” Vladimir Osakovskiy, a Moscow-based
analyst at Bank of America Corp., wrote in an e-mailed report
today.
Yanukovych’s turn toward Russia sparked the biggest anti-government rallies since Ukraine gained independence in 1991. By
returning to the country’s 2004 constitution, which shifts
authority from the president to parliament, the opposition may
be more willing to take a share of power, UDAR party leader
Vitali Klitschko said today.
‘Unstable’ Situation
Russia agreed in December to lend Ukraine $15 billion and
to reduce the price for natural gas deliveries after Yanukovych
rejected the EU pact. After buying $3 billion of Ukrainian bonds
in December, further aid may be on hold until a new cabinet is
formed, President Vladimir Putin said Jan. 29.
“If somehow Yanukovych left the scene, then the Russian
aid would come into question, and Ukraine badly needs that,”
Viktor Szabo, a money manager who helps oversee $10 billion at
Aberdeen Asset Management Plc in London, said by e-mail today.
“The situation is unstable.”
The EU’s main offer for Ukraine continues to be the
association agreement that Yanukovych refused to sign in
November, which would open the bloc to Ukraine’s exports,
European Commission President Jose Barroso said yesterday in
Brussels.
The hryvnia depreciated 1.4 percent to 8.7750 per dollar,
extending its decline this year to 6.1 percent. The yield on
Ukraine’s 2023 dollar bonds fell three basis points to 9.84
percent.
To contact the reporters on this story:
Andras Gergely in Budapest at
agergely@bloomberg.net;
Krystof Chamonikolas in Prague at
kchamonikola@bloomberg.net
To contact the editor responsible for this story:
Wojciech Moskwa at
wmoskwa@bloomberg.net