Deteriorating expectations of market participants regarding a possible Russian attack on Ukraine led to a new fall in Ukrainian Eurobond quotes on Friday by 2.5-3.6% (depending on the maturity). According to Bloomberg quotes, the price of the shortest maturing Ukrainian securities since the beginning of the year has lost 2.8%, as a result of which the rate on them jumped from 14.25% to 19.5%.
Eurobonds maturing in 2023 decreased in price by 2.5%, which led to an increase in yield from about 12.2% to 14.1%. Falling prices of Eurobonds maturing in 2024-2025 by 3-2.5% led to an increase in their profitability by almost 1.7-1 percentage points - up to about 13.5% and 12.2%, respectively.
The sale of Ukrainian securities also affected the issues of corporate Eurobonds.
Following the assets, panic spreads to the foreign exchange market. At interbank trading on January 14, the dollar exchange rate crossed the 28 hryvnia mark for the first time in many months. In addition, against the backdrop of panic, speculation in the foreign exchange market may appear, which will increase fluctuations.
According to the National Bank of Ukraine, during the week of January 10-14, $330.7 million were sold on the interbank foreign exchange market. This is three times more than the same week last year.
Analysts remind that the next two months will be the peak for Ukraine in terms of payments on public debt. So, according to the Ministry of Finance, UAH 66.3 billion of debts will have to be paid in February, and in March the time will come for payments on external borrowings in the amount of UAH 22.3 billion.
All this could lead to the fact that the government will have to significantly increase borrowing rates in order to be able to raise the necessary funds.