Ukraine Bonds Extend Slump as Hryvnia Falls to Record on Gas Row
Ukraine’s Eurobonds slid for a third
day and the hryvnia plunged to an all-time low as a dispute over
gas prices exacerbated the standoff with Russia amid turmoil in
the east of the country and a quest for emergency aid.
The yield on the dollar debt due April 2023 rose 14 basis
points to 9.6 percent, the highest since March 25, according to
data compiled by Bloomberg. The hryvnia weakened 1.7 percent to
11.98 per dollar by 12:50 p.m. in Kyiv after depreciating to a
record 12.083 earlier today.
Russian President Vladimir Putin has ratcheted up pressure
on Ukraine after annexing Crimea last month, ignoring sanctions
from the U.S. and European Union, massing troops along its
neighbor’s eastern border and raising gas prices. Ukraine won’t
import Russian gas until a price is agreed, Energy Minister Yuri Prodan told reporters in Kyiv today.
“The Russian gas-price hike is not exactly improving the
situation, nor the uncertainty over the very fluid situation in
Ukraine’s eastern provinces,” John Hardy, Copenhagen-based head
of foreign-exchange strategy at Saxo Bank A/S, said in e-mailed
comments today. “I would steer clear of Ukrainian assets.”
Ukraine, which faces more than $9 billion in maturing debt
and interest payments this year, expects to receive $13.5
billion of bailout funds including International Monetary Fund
aid, Prime Minister Arseniy Yatsenyuk said April 4.
‘Essentially Insolvent’
“The country is essentially insolvent and entirely at the
mercy of international institutions and Western aid,” Hardy
said. “The path of escalation could be Ukraine cutting off gas
deliveries that run through the country to the rest of Europe.”
Ukrainian sovereign debt maturing June 4 fell to 96.87
cents on the dollar, lifting the yield by 154 basis points, or
1.54 percentage points, to 30.56 percent. The Ukrainian Equities
Index declined 0.2 percent to 1,084.43.
Ukrainian security forces continued an “anti-terrorist”
operation in some eastern cities after freeing buildings seized
by pro-Russian protesters in Kharkiv. The activists want a
referendum on joining Russia and a boycott of Ukraine’s May 25
presidential election.
“Russia is putting substantial economic, military and
political pressure on Ukraine, and we do not expect Russia to
step back until its demands are met,” Vadim Khramov, a London-based analyst at Bank of America Corp., wrote in an e-mailed
report today.
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
Chris Kirkham, Matthew Brown