Ukrainian bonds shoot up as investors expect Trump to end war

Ukrainian Eurobonds have risen 12 percent in the last month on investor optimism that Donald Trump's victory as president of the United States will end the Russia-Ukraine war and boost Ukraine's ability to repay creditors.

Source: Financial Times

Details: During the election campaign, Trump promised to rapidly stop the war in Ukraine.

Ukraine's bonds maturing in 2036 jumped from 44 to 49 cents on the dollar over the last month, while GDP warrants increased even more rapidly.

Despite additional Russian attacks on infrastructure, Ukrenergo bonds increased by more than 160% this year, reaching 67 cents per dollar.

The hike comes barely two months after Kyiv concluded a debt restructuring of more than $20 billion, one of the fastest and largest public debt procedures in recent history.

According to the Financial Times, bond investors are hoping that Trump would rapidly end the war, Ukraine will reach a peace agreement with the loss of some land, and the Ukrainian economy will recover quickly.

"The main part of the trade has really been based on the war ending, or at least the possibility of Trump pushing through the start of negotiations," said Thys Louw, portfolio manager at Ninety One, which owns certain Ukrainian bonds.

At the same time, not all investors share Ninety One's optimism. Mohammed Elmi, Federated Hermes' portfolio manager, expressed doubts about the likelihood of a rapid peace agreement. Furthermore, there are uncertainties about the health of the Ukrainian economy following the negotiations, as well as if it will even be a priority for the new White House administration.

"Trump has a lot to do, with a big policy agenda to go through. These negotiations could also be quite prolonged," he said.

Background: Ukrainian Eurobonds and GDP warrants have reacted to the growing news of Donald Trump's victory in the US presidential election.

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