Ukraine's sovereign bonds surge after Trump victory as investors expect peace talks, FT reports

Ukraine’s sovereign bonds rose in price after Donald Trump’s win in the U.S. presidential elections as investors expect a quicker end to the war, the Financial Times reported on Nov. 14.

Over the past month, the country's dollar-dominated bonds have risen 12%, FT reported, as investors anticipate Trump will push for a ceasefire that could jumpstart Ukraine's recovery and ability to repay its creditors.

The outlet pointed out that the jump in Ukrainian bonds began in mid-October when markets began to believe in a Trump victory.

Trump has pledged to end the war within "24 hours," sparking fears he might push Ukraine toward painful territorial concessions to achieve a quick peace deal.

The rise in price follows an agreement reached in September between Ukraine and its creditors to restructure more than $20 billion in international debt. The deal shrank Ukraine's state debt by $9 billion, allowing it to avert default and helped its economy stay afloat amid Russia's full-scale war.

The country's bond maturing in 2036 rose from 44 to 49 cents on the dollar in the past month, FT reported. GDP-warrants, a growth-related fixed-income instrument, also jumped to a record high following Trump’s election since Russia’s full-scale invasion began in February 2022.

The FT also reported that a bond owned by Ukraine's state-owned grid operator Ukrenergo rallied more than 160% to 67 cents on the dollar. Bloomberg reported last week that Ukrenergo announced it would suspend bond payments on its dollar-denominated notes that mature in 2028 and would seek a restructuring agreement with creditors.

Not all investors are so bullish about Ukraine's recovery prospects. Portfolio Manager at Federated Hermes Mohammed Elmi told the FT that "There is still a significant amount of unanswered questions” about the country's future after any potential negotiated settlement.

Ukrainians have purchased $25 billion in domestic government bonds since start of full-scale war

“Thanks to the funds raised from domestic government bonds, we were able to finance more than 200 days of our security and defense, which is equivalent to 15% of Ukraine’s GDP (gross domestic product) in 2023. Investments in government bonds have become the second largest source of financing for the…

The Kyiv IndependentMartin Fornusek