March 20, 2017 / 2:17 PM / 3 years ago

UPDATE 1-Ukraine dollar bonds hit 3 1/2-month low as IMF postpones aid decision

(Adds CDS move, updates bond prices, adds background)

LONDON, March 20 (Reuters) - Ukraine’s dollar-denominated bonds fell across the curve on Monday, with longer-dated maturities touching their lowest since early December, after the International Monetary Fund delayed a decision on disbursing more aid.

The 2026 and the 2027 bond lost more than 0.5 cents to trade just above 90 cents in the dollar before trimming their losses, according to data from Tradeweb.

Five-year credit default swaps for Ukraine, which traders use to hedge against default risk, rose on Monday to 627.59 basis points (bps), according to data from IHS Markit, up from 620 bps at Friday’s close.

“The IMF delay is a technical issue,” Sergei Voloboev, chief economist at Norvik Banka told a conference in London. “I recognise this is a short-term negative for Ukraine assets and we see the prices on the screen reflecting that delay today.”

The IMF and Kiev announced on Sunday that the fund had postponed a decision to disburse more aid to Ukraine in order to assess the impact of an economic blockade Kiev imposed on separatist-held territory.

Ukrainian authorities have now halted all cargo traffic with rebel-held territory in the east of the country, formalising an existing rail blockade by Ukrainian activists that has led to the worst political crisis in nearly a year.

The IMF’s Executive Board had been due to meet on Monday to approve more assistance as part of a $17.5 billion bailout programme for the war-torn nation, in exchange for the pro-Western government passing reforms and tackling corruption. (Reporting by Karin Strohecker and Sujata Rao; Editing by Jamie McGeever, Larry King)

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