We speak to Konstantin Stetsenko, Founding Partner at ICU, the leading asset manager in Ukraine, to find out what caused the rally and whether he expects it to continue into 2020. Who’s behind the rally? Konstantin: The increase in local bond volumes was driven mainly by international investors last year. International investors became active buyers of local government bonds in anticipation of a stronger hryvnia and a decrease in National Bank of Ukraine discount rate. This has helped drive the increase in international investors holdings domestic bonds up to $5bn, compared with just $0.2bn in 2018.
The 10-year euro-denominated bond was oversubscribed, priced at a yield of 4.375 percent which surprised many analysts and Ukraine watchers. Konstantin Stetsenko, founding partner of ICU, the leading asset manager in Ukraine, noted that Ukraine would not have been able to sell the bond at such a low yield a year before.