Ukraine Bonds Jump on Reports Jaresko Offered Prime Minister Job

  • Appointment would be 'very market friendly': Dragon Capital
  • Ukraine needs to resolve political crisis to unblock IMF aid

Ukrainian bonds wiped out their 2016 losses this month as speculation Finance Minister Natalie Jaresko will be named prime minister boosted confidence the country will pull through its worst political crisis since a pro-Europe coalition came to power two years ago.

The nation’s Eurobonds have handed investors 3.7 percent this month, bringing 2016 returns to positive territory after a more than 4 percent loss in February. The yield on $1.3 billion of bonds maturing in September 2025 dropped 1.1 percentage points last week, the most since new notes were issued in November after a restructuring, and were little changed at 9.57 percent on Monday.

After weeks of political infighting that has delayed Ukraine’s international aid program, investors are relishing the prospect of a government led by Jaresko, a Chicago-born former investment banker who helped broker the country’s $15 billion debt restructuring last year. Negotiations on Jaresko’s possible appointment were held last week, Ukrainska Pravda newspaper reported on Friday, citing an unidentified official in the presidential administration.

“There is continued speculation of a possible appointment of Natalie Jaresko as prime minister, which would be very market-friendly if it indeed materializes," said Fyodor Bagnenko, a managing director for fixed-income trading at Dragon Capital in Kiev. “Stronger global risk sentiment is also helping.”

Daria Marchak, a spokeswoman for Ukraine’s finance ministry, declined to comment on the news report when contacted by phone on Friday.

President Petro Poroshenko has seen his administration splinter after Economy Minister Aivaras Abromavicius resigned in February and Prime Minister Arseniy Yatsenyuk lost his majority in parliament when two parties left the ruling coalition. The political wrangling is creating further delays to a $17.5 billion International Monetary Fund loan whose disbursement has been delayed since October.

Since her appointment as finance minister in December 2014 as part of a group of technocrats, Jaresko has helped steer the economy back toward growth after two years of recession. Ukrainian bonds returned the most in the world last year after she negotiated a market-friendly debt deal to avert default as well as helped push an unpopular budget through parliament.

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