New Eurobond spreads tightening

Обзор облигаций 19.11.2015 Spreads of new Ukrainian Eurobonds that began trading a few days ago tightened significantly through yesterday to 586-646 from 664-740 seen this past Monday. This forced the yield curve to move to be flat at 8.07-8.17. Prices rose to about 96.87-98.97. Investment implications: Spreads tightened on recent positive news of Russia's willingness to negotiate the US$3bn debt restructuring, of Soros' investments in Ukraine, and of the European association agreement taking effect 1 January 2016. At the same time, this tightening could be overly optimistic, particularly as spreads are very close to other B- countries while Ukrainian risks remain high due to the unresolved problems in Eastern Ukraine, the slow implementation of reforms, and uncertainty over the next IMF decision on the third tranche of financing.