Ukraine

Expectations of increased demand for emerging market local currency bonds are starting to wane, as the macroeconomic backdrop and interest rate volatility point to a stronger dollar in the short term.

Negotiations between the International Monetary Fund and some emerging market countries are yielding mixed results. While some sub-Saharan African sovereigns are making progress in their talks, Ukraine's long-running saga to unlock emergency funding has been unsuccessful so far.

Ukraine is facing delays in securing funding disbursements from the IMF, as questions around the authenticity of its anti-corruption drive cloud discussions between the country and the Fund. That may push Ukraine to tap the bond markets again, which last year welcomed it a number of times.

Ukraine, which has proven itself a favourite of emerging market investors this year, has slipped into international markets for a small dollar tap before year-end. The trade comes amid strained negotiations between Ukraine and the IMF over the disbursement of emergency funding.

Ukraine is planning for a lower budget deficit in 2021 but the country is more than confident of its debt issuance abilities and its chances of reaching an agreement with the IMF, the debt management office told GlobalCapital. Another Eurobond issue could be on the way soon.

Ukraine is expected to return to international bond markets as concerns mount around the impact the country’s lack of progress with anti-corruption reforms will have on an upcoming IMF disbursement.

Analysts believe optimism over the IMF disbursing funds to Ukraine this year is unfounded, as the country is struggling to fulfil the conditions it has to meet to be granted the money.

Two EM bond issuers beat hasty retreats from the primary market this week. But despite the challenges the pair faced, bankers and investors believe the market is open for borrowers looking to pick up a bit of funding ahead of what is expected to be a tortuous US election. Lewis McLellan reports.

The National Bank of Ukraine has stripped deputy governor Kateryna Rozhkova of her responsibility for banking supervision. The move follows the NBU’s official reprimand of Rozhkova and a colleague over a media interview.

Naftogaz of Ukraine elected to pull its long six year benchmark bond from the market on Monday, postponing it indefinitely.

Naftogaz announced on Monday that it was coming to market for a six year dollar benchmark — its first of the year. The initial price thoughts indicated a substantial cheapening since its last trip to the bond market in November 2019.

The Baltic covered bond market is expected to take another stride forward with the advent of Latvia’s draft law, which currently is being debated in parliament. At the same time, the European Bank for Reconstruction and Development (EBRD) has been working closely with the Bulgarian, Croatian and Ukrainian authorities to help develop the basis for their own covered bond laws.