Ukrainian government Eurobonds denominated in US dollars rose noticeably after the Democratic Party's victory in the midterm elections to the American Congress. Investors expect that the change in the political balance in Washington will help maintain military support for Ukraine and reduce risks to its defense capability.
Bloomberg reported this on November 4, citing financial market data and investor comments.
Ukrainian dollar bonds with a coupon rate of 4.5% and maturity in 2034 rose by more than one cent per dollar of face value, exceeding 63 cents. This is the highest level in more than a month. At the end of trading on Wednesday, Ukrainian securities were among the growth leaders in emerging markets.
Positive dynamics were also observed for other issues of Ukrainian government debt. According to Tradeweb data cited by Reuters, Ukraine's bonds with a 4.5% coupon and maturity in 2035 added 1.1 cents, reaching 62.1 cents per dollar of face value. This issue also recorded its highest level since late September.
The main growth factor was investor expectations regarding further US policy toward Ukraine. After the Democrats' victory, who will gain control of both houses of Congress from January 2027, market participants expect a reduction in the risk of limiting American military and intelligence support for Kyiv.
Aberdeen Investments investment director Viktor Szabo noted that sentiment toward Ukrainian assets had recently deteriorated due to Russian strikes on energy infrastructure. Now, he said, the market expects that the new Congress will be able to counter possible restrictions on intelligence sharing and Ukraine's access to the Starshield satellite system.
As "Kurs Ukrainy" reported earlier, the new majority in Congress may try to restore direct funding for aid to Ukraine. However, relevant decisions will require support from some Republicans, and to overcome a possible presidential veto, two-thirds of the votes in both houses.
At the same time, the rise in Ukrainian bonds took place amid a broader positive reaction of financial markets to the results of the American elections. According to Reuters, on November 4, the MSCI emerging market currency index rose by 0.8%. Investors revised expectations regarding US fiscal and economic policy under divided control of the executive and legislative branches.
Despite improved sentiment, the future policy of President Donald Trump toward Ukraine remains uncertain. Capital Economics chief economist Neil Shearing suggests that the US president may use his foreign policy powers more actively, including trying to accelerate the end of the war. The terms of a possible settlement remain a key risk for Ukraine.
The rise in Eurobond prices reflects a change in investors' assessments of the risks of Ukrainian government debt, but does not itself mean new funds flowing into the budget. It is about an increase in the market value of already issued debt securities. Further dynamics will depend on US decisions regarding support for Ukraine, the security situation and the course of peace negotiations.
Based on materials: Bloomberg, Reuters / Tradeweb
