The cost of insuring Ukrainian government bonds increased to the highest level in four years as Russia cast doubt on imminent assistance for its neighbor.
Five-year credit-default swaps, contracts insuring Ukraine’s debt against non-payment, rose 21 basis points to 11.19 percentage points at 4:24 p.m. in Kiev, the highest since January 2010, according to data compiled by Bloomberg.
The yield on the sovereign’s June 2014 dollar note advanced 75 basis points to 19.15 percent. Investors sold bonds as Sergei Markov, a political adviser to Vladimir Putin’s staff, said the Russian President “believes that time is on his side” in negotiations with Ukrainian counterpart Viktor Yanukovych over closer economic ties including a customs union.
While riot police and protesters squared off in central Kiev as anti-government demonstrations continued for a third week, the rate at which the country’s banks borrow overnight from each other reached a 2013 high.
“I am surprised that asset prices have not dropped even more given the seriousness of the situation,” Tim Ash, chief emerging-markets economist at Standard Bank Group Ltd. in London, said by e-mail today.“It will be difficult for Yanukovych to secure either Russian money or a bailout” from the EU or the International Monetary Fund, he said.
Overnight Rates
Ukraine needs at least $10 billion in loans to improve its balance of payments and avoid the risk of a default, the Interfax news service cited First Deputy Premier Serhiy Arbuzov as saying Dec. 7. The government has rejected conditions for a bailout from the International Monetary Fund, which included higher energy prices.
The yield on Ukraine’s dollar bond due in April 2023 increased eight basis points, or 0.08 percentage point, to 10.46 percent, 16 basis points below a record high set on Dec. 4. The KievPrime overnight index, which shows one-day borrowing costs for Ukrainian lenders, jumped to 20 percent at today’s daily fixing from 12 percent on Dec. 6.
The rate on three-month deposits climbed to an 11-month high of 16.5 percent. Ukraine’s foreign reserves have dwindled more than $6 billion in the last year to $18.79 billion on Nov. 30, the lowest since 2006, as the central bank propped up the hryvnia currency and helped pay back the government’s foreign debt.
The hryvnia was little changed at 8.2100 per dollar today. The reserves may drop below $18 billion by Dec. 31 because of the “political crisis and subsequent tension on the forex market,” Alexander Paraschiy, head of research at Concorde Capital in Kiev, said in a research note today.
The low level of reserves “should prompt the government to act to resolve the political crisis, otherwise it can lose its control over the forex market,” Paraschiy said.
bloomberg.com
Five-year credit-default swaps, contracts insuring Ukraine’s debt against non-payment, rose 21 basis points to 11.19 percentage points at 4:24 p.m. in Kiev, the highest since January 2010, according to data compiled by Bloomberg.
The yield on the sovereign’s June 2014 dollar note advanced 75 basis points to 19.15 percent. Investors sold bonds as Sergei Markov, a political adviser to Vladimir Putin’s staff, said the Russian President “believes that time is on his side” in negotiations with Ukrainian counterpart Viktor Yanukovych over closer economic ties including a customs union.
While riot police and protesters squared off in central Kiev as anti-government demonstrations continued for a third week, the rate at which the country’s banks borrow overnight from each other reached a 2013 high.
“I am surprised that asset prices have not dropped even more given the seriousness of the situation,” Tim Ash, chief emerging-markets economist at Standard Bank Group Ltd. in London, said by e-mail today.“It will be difficult for Yanukovych to secure either Russian money or a bailout” from the EU or the International Monetary Fund, he said.
Overnight Rates
Ukraine needs at least $10 billion in loans to improve its balance of payments and avoid the risk of a default, the Interfax news service cited First Deputy Premier Serhiy Arbuzov as saying Dec. 7. The government has rejected conditions for a bailout from the International Monetary Fund, which included higher energy prices.
The yield on Ukraine’s dollar bond due in April 2023 increased eight basis points, or 0.08 percentage point, to 10.46 percent, 16 basis points below a record high set on Dec. 4. The KievPrime overnight index, which shows one-day borrowing costs for Ukrainian lenders, jumped to 20 percent at today’s daily fixing from 12 percent on Dec. 6.
The rate on three-month deposits climbed to an 11-month high of 16.5 percent. Ukraine’s foreign reserves have dwindled more than $6 billion in the last year to $18.79 billion on Nov. 30, the lowest since 2006, as the central bank propped up the hryvnia currency and helped pay back the government’s foreign debt.
The hryvnia was little changed at 8.2100 per dollar today. The reserves may drop below $18 billion by Dec. 31 because of the “political crisis and subsequent tension on the forex market,” Alexander Paraschiy, head of research at Concorde Capital in Kiev, said in a research note today.
The low level of reserves “should prompt the government to act to resolve the political crisis, otherwise it can lose its control over the forex market,” Paraschiy said.
bloomberg.com
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