As anyone who follows Ukrainian government international bonds will know, the country’s yield curve has a tendency to invert. When this happens, it suggests that while investors think things will probably be all right in the long run, they see a big risk of something going wrong in the near future.
In its latest inversion (see below), the curve has been back to front for about two months, suggesting investors were seriously concerned before demonstrations began three weeks ago on the streets of Kiev, and long before Viktor Yanukovich, the president, jilted the European Union by not, after all, signing trade and association agreements at the EU’s Eastern Partnership summit at Vilnius on November 28-29. Continue reading »
Reports from Kiev say opposition party headquarters have been raided by government troops and independent media outlets taken off the air. Meanwhile, in what looked like a conciliatory move, President Viktor Yanukovich said he would meet three former presidents on Tuesday to find a compromise to Ukraine’s rapidly-deteriorating political crisis.
It looks like a high-stakes version of muddle-through, the strategy that has kept Yanukovich in power as Ukraine’s economy has sunk into recession. But how long can the president last? Continue reading »
Ukraine’s president Viktor Yanukovich met Vladimir Putin, his Russian counterpart, at the Winter Olympic resort of Sochi on Friday to discuss “trade-economic cooperation in different economic spheres and preparation to the future Strategic Partnership Agreement,” according to Yanukovich’s website.
A strategic partnership agreement? Really? Yanukovich and his lieutenants have been claiming imminent deals with Russia, China and the European Union for the past few days (our photo shows him in China with premier Li Keqiang before leaving for Sochi). But so far there is no sign of the cash injection Ukraine needs if it is to stave off what some analysts fear is now an imminent threat of a balance of payments crisis and even default. Continue reading »
FT eastern Europe editor Neil Buckley reports from Kiev on the unpredictable political situation following violent clashes between protestors and police at the weekend, the impact of economic recession on the country and the response of Russia and the west.
With protesters in Kiev apparently settling in for a long haul, the question that looms increasingly large is: what happens next? The status quo is looking increasingly unviable but, so far, Ukraine’s government appears to have no plan B.
Or rather, it appears to have three plan Bs, none of which stands much chance of success. Continue reading »
Protesters and riot police face each other in front of the Ukrainian parliament, December 3
Worries about the unfolding events in Ukraine sent the cost of insuring against a default on its debt soaring once again on Tuesday. But Viktor Yanukovich, the president, appeared unfazed: he set off on a state visit to China as planned, news agencies reported.
The cost of insuring against default on government debt in the next five years reached more than 1106 basis points (or more than 11 per cent of the amount insured), up more than 34 bp from Monday’s close of 1072 bp, according to Bloomberg. Continue reading »
The Kyiv Post is running live updates of events surrounding the ongoing protests in Ukraine, with links to streaming video. Its latest update at pixel time: 1,000 national guard troops have been deployed to help secure government buildings.
As Timothy Ash of Standard Bank noted in an addition to his eight-point reflection carried by beyondbrics on Monday, the blockade of government buildings raises concerns about the country’s ability to pay its way. Continue reading »
What do markets make of the weekend’s events in Kiev? Here’s what: the price of insuring against a default on Ukrainian debt in the next five years surged almost 100 basis points on Monday morning, while the price of the country’s benchmark 2020 dollar bond fell more than 2 percentage points to a two-month low of 85 cents on the dollar.
An estimated 350,000 people demonstrated in Kiev at the weekend, protesting against the government’s decision not, after all, to sign association and free trade agreements at last week’s long-awaited EU Eastern Partnership summit in Vilnius. In a reminder of the Orange Revolution that toppled the government in 2004, opposition leaders called for the prime minister and president to resign. Continue reading »
By Timothy Ash of Standard Bank
For the casual/neutral observer of Ukraine, perhaps based in the EU, the story perhaps looks quite straitforward: the EU/IMF/west needs to pull its finger out and provide enough financing for Ukraine to offset the impact of potential economic sanctions from Russia.
Opinion polls show that a great majority of the Ukrainian people now favour EU integration – 57:14, according to one recent poll – as opposed to hooking back up with Russia in the CIS Customs/Eurasian Union. Ukrainians are braving the elements in street demonstrations in favour of signing with the EU. Surely this should be supported? After all, the sums needed by Ukraine ($15bn-$20bn), appear small change relative to the size and strategic energy importance of Ukraine, compared to the huge size of Euro-periphery bail-outs.
If only things were that simple. Continue reading »
Time will tell whether Franklin Templeton’s bold $5bn bet on Ukrainian sovereign debt will pay off as handsomely as the US money manager’s play on Ireland in prior years.
We may not have to wait long to find out, judging by the rate at which Ukraine’s central bank reserves and economy at large are deteriorating. Continue reading »
Ukrainian President Viktor Yanukovich sounded deadly serious during a passionate speech he gave on his administration’s commitment to fighting corruption on Wednesday.
Himself accused of corrupt practices for the way he managed to occupy a lavish estate in a Kiev suburb, it was delivered at a World Economic Forum event in Kiev, a gathering to discuss the nation’s future as the EU summit nears in later this month in Vilnius. But hang on: wasn’t the EBRD supposed to be in town to sign a new anti-corruption Continue reading »
This has been a good week for Yulia Tymoshenko, Ukraine’s jailed opposition leader, and for the country’s chances for forging closer ties with the EU. But it was yet another bad one for investors and businesses on the ground, with Kiev’s cash-crunched central bank imposing fresh controls on foreign currency inflows.
But first the good news. Continue reading »
Firtash: brighter side
The first associations that come to mind for many Brits when Ukraine is mentioned are likely things such as Chernobyl; the 2012 European football tournament; the 2004 Orange Revolution; Yulia Tymoshenko; Europe’s breadbasket (perhaps); and billionaire oligarchs who, along with Russian counterparts, have bought up some of London’s most expensive flats.
One of them, billionaire Dmitry Firtash (pictured) – a chemicals-to-energy magnate and former partner of Russia’s Gazprom in the supplying natural gas to Ukraine and Europe – hopes to show Ukraine’s brighter side. Continue reading »
Sergey Glazyev piles on the pressure
An advisor to Russia’s president warned that Ukraine’s already troubled economy would need a €35bn bailout to avoid default if it signs a free trade and association pact with the EU this November, in a clear sign of fresh pressure on Kiev to back away from western integration and instead join a Moscow-led customs union of former Soviet republics. Continue reading »