(Bloomberg) — Ukraine’s debt-management chief cautioned investors against betting on a quick and tidy resolution to the conflict with Russia based on Donald Trump’s return to the White House next week.
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“If you look at our yield curve, people expect some quick, positive outcomes,” Yuriy Butsa, Ukraine’s government commissioner for public debt management, said on the sidelines of the Invisso CEE Forum in Vienna on Tuesday. “I think the outcome will be a bit more nuanced.”
Ukraine’s sovereign dollar bonds surged 58% last year as investors bet that Trump would carry through on campaign pledges to quickly force an end to the conflict. Butsa questioned whether such market pricing was “very informed or rational.” He likened the movements in Ukraine’s bond prices to other so-called Trump trades such as a surge in the price of cryptocurrencies.
Ukraine concluded a $20-billion debt restructuring in August, but excluded from the deal portions of its liabilities, including warrants linked to economic growth. Expectations for a revival in growth prospects have built up as investors bet there would be a ceasefire soon after Trump’s inauguration, and prices on warrants have also risen in tandem.
Butsa said Ukraine’s government has not yet engaged with a creditor committee on restructuring the GDP warrants. He said internal talks with government agencies and official creditors were ongoing on the best way to approach the issue, after which a plan would be presented.
Ukraine will likely lift capital controls on repatriating coupon payments for its bonds this year, Butsa said. Lifting controls on repatriating principal amounts inside Ukraine — about $500 million worth — would take longer, he said.
–With assistance from Srinivasan Sivabalan.
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