Ukraine Bonds Gain for Sixth Day as IMF Wraps Up Bailout Talks

Ukraine’s 2023 Eurobonds gained for
a sixth day as the government is scheduled to complete bailout
talks with the International Monetary Fund today.

The yield on the debt due in April 2023 fell eight basis
points to 9.83 percent by 3:14 p.m. in Kyiv, bringing the six-day retreat to 108 basis points. The rate reached a record 11.37
percent on Feb. 19 as concern Ukraine may default peaked, data
compiled by Bloomberg show.

Premier Arseniy Yatsenyuk will meet IMF representatives
today as the Washington-based lender concludes its three-week
mission in Ukraine, a deputy foreign minister told reporters in
Kyiv. The government, which came to power after an uprising
ousted President Viktor Yanukovych last month, is seeking
financial aid as the country grapples with a widening current-account deficit and dwindling foreign reserves.

“The IMF deal will surely help the economy from
collapsing” and have a “direct positive impact” on Ukraine’s
bonds, Thu Lan Nguyen, a Frankfurt-based currency strategist at
Commerzbank AG, said by e-mail today.

While the prospect of about $15 billion in emergency loans
from the IMF, U.S. and European Union is drawing investors back
to Ukrainian bonds, the hryvnia has been tumbling since the
central bank abandoned a peg to the dollar last month. The IMF
previously recommended Ukraine adopt a more flexible exchange-rate regime to constrain the current-account deficit and make
the economy more competitive.

The hryvnia slid 2.8 percent to 10.96 per dollar today,
extending this year’s depreciation to 25 percent, the worst
performance among all currencies tracked by Bloomberg.

“The IMF will require the central bank to keep flexibility
in the hryvnia,” Nguyen said. “A weak currency helps in
alleviating some pressures from the weak economy.”

To contact the reporter on this story:
Krystof Chamonikolas in Prague at
kchamonikola@bloomberg.net

To contact the editors responsible for this story:
Wojciech Moskwa at
wmoskwa@bloomberg.net
Chris Kirkham, Daliah Merzaban

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