Political effect: Ukraine’s Eurobonds soar after Trump’s statements
29 July 19:41
US President Donald Trump’s statements on the war in Ukraine and calls for Russian leader Vladimir Putin to stop the aggression pushed Ukrainian Eurobonds up. Bonds maturing in 2035 and 2036 added more than 1.5 cents to the price, the strongest gain in the past month, "Komersant Ukrainian" reports citing Bloomberg.
The markets reacted sharply positively to these signals, despite the fact that negotiations between Kyiv, Washington, and Moscow have not yet yielded concrete results. Investors have begun to price in a potential breakthrough in the diplomatic process, even if there are no actual grounds for it.
According to Kaan Nazli, Senior Economist and Portfolio Manager at Neuberger Berman Europe Ltd, the market has begun to take into account the change in risks in the value of bonds. Despite the absence of breakthroughs at the front, the overall dynamics of hostilities indicate a protracted war. At the same time, it is uncertainty that makes the market react to political promises, particularly when they come from key figures in the upcoming US election campaign.
Eurobonds (or Eurobonds) are government bonds that are placed on foreign exchanges in dollars and euros. Their interest rates range from 4-6%.
Eurobonds can be purchased through banks or investment companies. Although Eurobonds are traded in foreign currency, in Ukraine they can be purchased for the national currency at an interbank rate of 10-15 kopecks to the established rate. Coupon income is also accrued in hryvnia at the interbank rate. Redemption is possible both in foreign currency – through a bank SWIFT transfer – and in hryvnia.
Ukrainian bonds have also been included in the list of the best debt instruments among developing countries. According to Bloomberg, six of the eight best performing positions in this group are currently held by Ukraine. This indicates that demand for Ukrainian sovereign debt remains resilient even in the face of a war economy, sanctions uncertainty, and high budgetary risks.
In February of this year, the market already demonstrated a similar reaction after the release of information about telephone conversations between Donald Trump, Volodymyr Zelenskyy, and Vladimir Putin. Back then, a short-term rise in quotations gave way to a slump when it became clear that the talks had not yielded any real results.
Read also: Five new military bonds have appeared in Diia: what are the rates and when are the payments due?
However, analysts emphasize that even if political signals do not lead to immediate action, they create expectations of future changes, which in itself shapes market dynamics. For investors who hold Ukrainian Eurobonds, such statements give them a chance to increase the value of their assets, even if the real situation at the front remains tense.
At the same time, economists warn that excessive market emotion creates risks for long-term decisions. Investors should keep in mind that Ukraine is currently in a state of military conflict with an unpredictable duration, and the terms of debt restructuring are still on the agenda of international negotiations.
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