In a testimony to the current enthusiasm of bond investors for practically any paper with a yield attached, Ukraine placed a $1.25bn Eurobond on November 20 that will be used to shore up its faltering currency.
Ukraine - rated four levels below investment grade by Standard & Poor's at B+ - priced the 10-year notes to yield 7.8%, or 6.187 points above similar maturity treasuries, according to data compiled by Bloomberg. By way of contrast, Poland sold €750m euros ($957m) of 12-year euro-denominated securities the same day at just 135 basis points (bp) over mid-swaps.
Talk of a possible devaluation of the hryvna is increasing, and the population has withdrawn around $2bn from banks in the last month. At the same time the central bank's hard currency reserves plunged by 8% alone in the last month. However, investors shrugged off these concerns to snap up Kyiv's third foreign currency offering of the year.
The high demand for emerging market bonds - driven by the liquidity actions of the US Fed and the European Central Bank - means the average yield on bonds sold by developing countries fell to a record low of 4.59% on October 16, according to data compiled by JPMorgan. Even so, the 7% yield is relatively cheap by Ukrainian standards.
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