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The lack of clarity regarding prospects for resolving the military conflict between Moscow and Kyiv is negatively affecting Ukrainian bonds.
This was reported by Bloomberg.
In 2025, dollar-denominated bonds have delivered investors losses of more than 10% — the worst result among emerging and frontier markets. This contrasts with the beginning of the year when expectations of a truce made them leaders of growth, and prices of some issues nearly doubled.
“The market has returned to levels before Trump’s election,” notes Viktor Szabo of Aberdeen Investments. “Promises of peace collided with reality: Putin doesn’t want it.”
As the publication writes, although interest in Ukrainian bonds persists, optimism about the outlook has weakened. The London-based fund Frontier Road has shifted to corporate bonds, which are less exposed to geopolitics. Bank of America still recommends investing in Ukraine’s external debt but warns of risks amid the protracted military conflict. Morgan Stanley expects the war to continue at least until the end of 2025.
It’s worth recalling that at the end of March, Reuters reported that Ukrainian bonds fell to record lows due to skepticism over the conclusion of a peace agreement.
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