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Putin, Vladimir

Ukrainian Bonds Rally on Hopes of Trump-Putin Talks Brokered Peace Deal

Strategic Insights

— 1 min read

Ukrainian bonds have experienced a significant rally, with some bonds rising from 62 cents to 67 cents on the dollar in a week, as investors bet on the possibility of a peace deal between Trump and Putin. The news has sparked a surge in assets tied to a reopening of Russia's economy, with shares in Vienna-listed Raiffeisen rising 20% and those of Rusal gaining nearly 20%. However, some analysts remain skeptical about the prospects of a ceasefire, citing Putin's larger strategic goals.

Key Takeaways:

  • Ukrainian bond prices have rallied, with a bond due in 2029 rising from 62 cents to 67 cents on the dollar in a week.
  • Debt linked to a peace deal and economic recovery has increased from 47 cents to 54 cents on the dollar.
  • Shares in Raiffeisen have risen 20% and have surpassed their pre-invasion price.
  • Russian markets are off-limits to western investors, and even funds from Asia and other regions have difficulty trading them.
  • Ukraine is facing an urgent deadline to find more money to fund its war effort on top of a $15bn-plus IMF bailout.
  • Yulia Svyrydenko, Ukraine's new prime minister, has signalled that the country will seek a new bailout from the IMF.
  • The prospect of a further restructuring of the bonds has affected Ukraine's efforts to change $2.6bn in GDP-linked securities.
  • Some investors have expressed concerns about Kyiv's offer to convert GDP warrants into more restructured bonds, citing potential losses.

Statistics:

  • Ukrainian bonds have rallied 5 cents on the dollar in a week.
  • Shares in Raiffeisen have risen 20% and are up 10% this year.
  • Rusal shares have gained nearly 20% in the past week, valuing the company at over $20bn.
  • The rouble has gained 42% against the US dollar this year, but is one of the worst-performing currencies among large emerging markets over the past month.
  • Ukraine's GDP-linked securities have dropped 77% in value since the invasion.
  • The IMF's $15bn bailout has anchored international financial support since 2023.

Sources:

  • Bloomberg
  • LSEG
  • Oxford Economics (Sleptsova, Evghenia)
  • Ninety One (Mark, Roger)
  • Anastasia Stognei

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