Loading ...Ukrainian bonds slumped the most since March as the threat of open war in the nation’s east deepened concern the government will struggle to repay debt.
The yield on Ukraine’s $2.6 billion of bonds due July 2017 soared 154 basis points to a record 17.67 percent at 7:14 p.m. in Kiev, bringing the eight-day increase to 428 basis points, or 4.28 percentage points. The hryvnia, which is down 18 percent this month in the world’s largest decline, was unchanged at 15.85 per dollar. Ukrainian shares slid for a fifth day.
The threat that a two-month-old cease-fire in Ukraine will unravel grew today as NATO accused Russia of sending troops and heavy weapons into its neighbor. As the nation suffers from its second recession in five years, the return to war raises the likelihood Ukraine will struggle to pay back debt, according to Standard Bank Group Ltd. The government has $14.63 billion of principal and interest payments due by the end of 2015, according to data compiled by Bloomberg.
“Investors are voting with their feet, they now expect further Russian military intervention and expect the West to do nothing to help Ukraine,” Timothy Ash, London-based chief economist for emerging markets at Standard Bank, said by e-mail today. Bondholders are increasingly concerned that a war could trigger a “collapse” of state, leaving the country unable to pay its debt, he said.
The separatists and their Russian backers are amassing troops in the areas of the Donetsk and Luhansk regions they’ve seized, Ukrainian Defense Minister Stepan Poltorak told a government meeting in Kiev earlier today. Russia’s Defense Ministry denied its involvement, state-run RIA Novosti reported.