Ukrainian dollar-denominated eurobonds rose on 4 November, the day after the US midterm elections. The Democrats won control of the House of Representatives and the Senate, and the price of Ukraine’s bonds maturing in 2034 exceeded 63 cents per dollar of nominal value. Some investors linked the rise to expectations that the new Congress will help preserve intelligence-sharing and Ukraine’s access to the Starshield satellite network.
| Maturity | Coupon | Quotes on 4 November per $1 nominal | Change |
|---|---|---|---|
| 2034 | 4,5% | Over 63 cents | Over 1 cent |
| 2035 | 4,5% | 62,1 cents | 1,1 cents |
How much did Ukraine’s dollar eurobonds rise?
The 2034 issue climbed to its highest level in more than a month. For the 2035 paper the bid price on the Tradeweb platform reached 62,1 cents per dollar of nominal value. That is the highest level for that issue since late September.
The rise came amid a broader market reaction to the US elections. The MSCI emerging-market currencies index added 0.8% that day, and the yield on 10-year US Treasuries fell by 5 basis points. Market participants singled out expectations of continued support from Washington as a factor for Ukrainian papers.
How should you read a quote of 63 cents per dollar?
A price of 63 cents per dollar of nominal value equals 63% of par. For bonds with a $1000 nominal, that is about $630 excluding accrued coupon income and fees. A one-cent move per dollar of nominal for such a parcel equals $10.
| Item | How to read it |
|---|---|
| Par $1000 | The amount from which quotes and the coupon are calculated |
| Quote 63 cents | Market price of about $630 per $1000 nominal |
| Coupon 4,5% | Annual coupon rate applied to nominal |
| Yield to maturity | Calculated metric that takes price, future payments and time to maturity into account |
Why are investors watching intelligence-sharing and Starshield?
Viktor Sabo, investment director at Aberdeen Investments, told Bloomberg that the market expects the new Congress to take steps that could reduce the risk of disruptions to intelligence-sharing or restrictions on access to Starshield. For holders of Ukrainian bonds, continuity of defence support is one of the factors in assessing sovereign debt risk.
When does the Starshield access agreement expire?
Starshield is SpaceX’s satellite service for government and military needs. On 5 November the Chargé d’affaires of Ukraine to the United States, Denys Sienik, said that the current agreement with the United States expires around mid-2027. He added that Kyiv wants to start talks now because agreeing a new deal will take time.
Which decisions in Washington will the market watch?
| Area | What to watch for |
|---|---|
| Defence aid | Votes on budget appropriations and subsequent implementation of adopted measures |
| Intelligence-sharing | Official statements from Kyiv and Washington about cooperation terms |
| Access to Starshield | Start of negotiations and agreement on a new deal |
Will the budget get money from the rise in eurobond prices?
On the secondary market investors buy and sell bonds Ukraine has already issued. The proceeds of such trades go to the previous owner of the bonds. The budget raises funds via new placements, and payments on outstanding bonds are made under the terms of the respective issue. So November quotes show how much buyers are willing to pay for Ukrainian debt after the US elections.
