(Updates, adds analyst, CDS, index)
LONDON Aug 27 Ukraine's sovereign dollar bond
prices surged on Thursday and debt insurance costs fell after
the country said it had reached a debt restructuring deal with a
committee of creditors.
The deal was judged by analysts to be investor-friendly and
to rule out a unilateral default by Ukraine. It also enables
Kiev to stay on track with an International Monetary Fund-led
Ukrainian dollar bond yield spreads on JPMorgan's EMBI
Global index contracted by 553 bps over U.S. Treasuries
to their narrowest since December 2014.
Ukraine's 2017 issue gained 10 cents to trade at eight-month
highs around 66 cents in the dollar, according to Tradeweb data.
The 2022 bond jumped 11 cents
A $500 million issue maturing at the end of September, which
is also subject to restructuring, rose 4.3 cents to also trade
at 64 cents
The deal involves a 20 percent writedown on bonds'
principal, a four-year maturity extension, a small increase in
coupons and 20-year growth-linked instruments
"Clearly more generous to bond holders than I had thought,
especially in the short end. The new coupon of 7.75 percent is
actually going to be higher on eight out of the 11 Eurobonds,"
said Jakob Christensen, a credit strategist at Exotix.
A bond trader in London said that while a 20 percent
writedown had already been priced in, a coupon of 7.75 percent
and the inclusion of GDP warrants - instruments linked to a
recovery in growth -- were the main drivers for the price gains.
Ukraine's five-year credit default swaps - instruments used
to insure against default or restructuring - fell 300 basis
points to 1998 bps, according to data from Markit.
The CDS had hit highs above 4,700 bps towards the end of May
when it appeared that Ukraine would be forced to default. On May
19, Ukraine's parliament passed a law allowing the government to
impose a moratorium on foreign debt payments.
Russia says it has not been approached by Ukraine over
restructuring a $3 billion Eurobond that matures in December
. Russian Finance Minister Anton Siluanov said
earlier this year it would take Ukraine to international courts
if Ukraine does not respect the terms of its debt repayments
(Reporting by Sujata Rao, additional reporting by Daria
Korsunskya, Vladimir Soldatkin and Lidia Kelly in Moscow;
editing by Larry King)