Coronavirus brought down the price of Ukrainian government bonds

Since the beginning of the week because of the panic in global equity markets, caused by the spread of the coronavirus Covid-19 outside of China, Ukrainian government bonds linked to GDP growth fell by 8.5%.

Коронавирус обрушил цены на украинские госбумаги

It is reported by Interfax-Ukraine.

Note, a warrant is a security holder which has the right to buy a proportional number of shares at a traditionally low price (compared to market) for a stipulated period of time.

It is reported that on the last working day of February 2020 GDP warrants fell by 2.8% to 99.1% of par, while the yield on Eurobonds grew by 0.2-0.3%.

So, the evening of 28 February Eurobond was quoted:

• Maturing in 2021 – about 4%;

• In 2023 – 5%;

• In 2026 – 6%;

• In the year 2032, at 6.5%.

It is noted that in the period from 2021 to 2024, Ukraine has to pay creditors about $ 19.1 billion GDP warrants, which was released in 2015. Precisely because of the issue of these securities the cost of debt was reduced. Besides, Ukraine managed to avoid default.

Natalia Yaresko, who held in 2015, the post of Minister of Finance of Ukraine, failed to agree with creditors on a so-called haircut (the haircut) when sovereign and guaranteed debt of the state was reduced by 20%, that is $ 3.6 billion.

In parallel, Ukraine issued securities — tools replacement cost (VRI) or GDP warrants.

Yield warrants tied to GDP of Ukraine. Payments on VRI possible from 2021, but the GDP, from which it will depend is the indicator of economic development in the two years before that, in 2019. This figure, the state statistics service will publish in the spring of 2020.