EN / PL
menu

Homepage > News > Nobody wants bonds from Ukraine

Nobody wants bonds from Ukraine


The Russians are gathering forces near Ukraine’s borders while closing its door to raising funds on the international market. Although aggression still remains only one of the possible solutions, it is already hitting the Ukrainian economy hard.

Investors do not want Ukrainian Treasury bonds

The possibility of a Russian invasion not only caused panic among the civilian population in the country and throughout Eastern Europe, but led to the collapse of the Ukrainian economy. While military forces are gathering at the borders, the Ukrainian Hryvnia has depreciated significantly against the dollar. The Treasury bond market has also suffered a lot – its profitability has increased to a level where a loan on the international financial market becomes almost impossible. Today, Kiev’s debt entails a risk that is unacceptable to investors.

Ukraina rentownosc obligacji

The yield on Ukrainian 6-year treasury bonds

President Volodymyr Zelensky blamed the current situation on the West, which was supposed to cause panic on the market through the narrative escalating tensions. One of its elements, according to some Ukrainian diplomats – completely unnecessary, was the order to evacuate the US and British ambassadors from the country.
Daniło Hetmancew also drew attention to the fact that in April last year, the West did not react, despite very similar circumstances:

“Why were our partners silent in April when there were the same number of soldiers at our borders?”

However, the difficult situation of the Ukrainian authorities will find reasons for optimism. The United States has recently mastered the tone of its statements, which may temporarily calm the market.

USDUAH dolar hrywna

Since November, Hryvnia has depreciated against the dollar by as much as 11%

Moreover, unlike in 2014, Ukrainians are better prepared for the crisis, thanks to the USD 31 billion foreign currency reserves, which will help to survive the period of the weakening of the Hryvnia and the fall in the prices of treasury bonds.

Outside help is also possible. It is counted on by the entire staff of Zelensky, who believes that Russia’s actions are aimed directly at the Ukrainian economy. The partners’ intervention is to be necessary to maintain its stability.
The European Commission has already talked about plans to provide Ukraine with USD 1.35 billion on the basis of long-term loans, and the possibility of granting financial support is also allowed by the United States:

“We are examining the possibility of additional macroeconomic aid to support Ukraine in the face of pressure from the build-up of Russian troops.”

The cost of servicing the Russian debt is also rising

Russia’s actions also affect Russia itself. The yield on 10-year Russian bonds at the peak even exceeded 9.8%, which means almost a double increase from the bottom in May 2020. The credit spread between Russia and the United States is now over 7.4%. This is the highest level since March 2016.
On Thursday, the Pentagon warned that the Kremlin may want to fabricate an excuse to invade, however, taking into account possible sanctions, the price that not only the Ukrainian but also the Russian economy will have to pay for the war may turn out to be too high.

Author: Izabela Kamionka

Are you a trader?

Help others and rate your broker! Use the search engine or find your broker on the list.



Ad:

Last news:

bucharest exchange with record value of transactions

Stocks Surge on Positive May Jobs Report and Senate Debt Ceiling Bill Approval

Stocks rallied on Friday following the release of a robust May jobs report and news ...
Read More
fdic

FDIC Reports Largest Deposit Decline in US Banks in 39 Years

US banks faced a significant setback in the first quarter as they experienced the largest ...
Read More
nvidia

Nvidia CEO Receives Rock Star Reception in Taiwan as AI Stocks Surge

Jensen Huang, the CEO of chip phenomenon Nvidia Corp. (NVDA), is currently enjoying celebrity treatment ...
Read More
turkish lira

Turkish Lira Hits All-Time Low as Erdogan Wins Re-election

The Turkish lira reached a new record low following the re-election of incumbent President Recep ...
Read More

Add a comment

Your email address will not be published. Required fields are marked *

 

Note: Opinions and posts on ForexRev.com represent personal opinions and views of their respective authors and should not be interpreted as recommendations to purchase or sell securities. ForexRev.org assumes no responsibility or liability for such content.
Go to top