13:41 01.04.2019

Ukrainian eurobond market responds favorably to outcome of first round of election – Concorde Capital analyst

2 min read
Ukrainian eurobond market responds favorably to outcome of first round of election – Concorde Capital analyst

The first reaction of the international loan market to the outcome of the first round of the presidential election is positive: rates on sovereigns fell from a fall by 0.26 percentage point (p.p.) in a day as of 10:30 am for 2020 eurobonds (0.46 p.p. in a week) to a decline by 0.07 p.p. for 2026 eurobonds (0.18 p.p. in a week), Head of the Analytical Department of Concorde Capital investment company Oleksandr Paraschiy has said.

"The reason for such dynamics, in my opinion, is that it has finally become clear: [Yulia] Tymoshenko has no chance of becoming president. After all, the option with Tymoshenko looked the most risky for sovereign debt, based on her positions on key issues that contradict the IMF program," he told Interfax-Ukraine on Monday morning.

According to him, the current quotes of Ukraine's international debt largely take into account Volodymyr Zelensky's victory in the presidential election, as sociological ratings indicated.

"Such a scenario is associated with considerable uncertainty: it is better than certainty in Tymoshenko's way, but worse than certainty in Poroshenko's way," Paraschiy said.

Speaking about the factors to which the market may react in the coming weeks, he highlighted the increase in the chances for the incumbent president, Petro Poroshenko, to which the reaction would be more positive, since it is a more understandable president for the West.

He called specifics from the mouth of Zelensky about the economic policy, relations with the IMF and other Western institutions, the prospects for debt service the second factor. "Most likely, this specifics will be constructive, so we can expect a positive market response," the analyst said.

In the event of the final victory of Zelensky, the reaction of the market, as predicted by Paraschiy, will be rather neutral, since his victory has already been taken into account in the price. "However, both positive and negative changes in market sentiment are not ruled out, depending on the rhetoric of Zelensky and his team," the expert said.

In his opinion, in the event of Poroshenko's victory, the reaction of players in the Ukrainian eurobond market will be positive.

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