Left in the Lurch
Ukraine bond traders kicked and screamed
Expectations relate to expectations and the prevailing bias can validate itself almost indefinitely. This is apropos of expectations of the future exchange rate policy of the National Bank of Ukraine. One caveat to keep in mind, however: To the extent that exchange rates are dominated by speculative capital transfers, they are purely reflexive. In the current situation, it’s difficult to sympathize with would-be buyers of Ukrainian government junk bonds, so we shouldn’t even try.
The unexpected resignation of National Bank of Ukraine Governor Yakov Smolii late on Wednesday night led the sovereign to pull its much-anticipated $1.75bn, 12-year dollar bond and a related offer to buy back notes due 2021 and 2022. The offer was priced on July 1.
No one likes being left in the lurch, and experts fear for the sovereign's access to institutional funding and capital markets in the future.
