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 Kiev, 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 Kiev. 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.”

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