EMERGING MARKETS-Ukraine bonds up on aid hopes, Brazil real rallies

lunes 24 de febrero de 2014 13:10 GYT

By Asher Levine and Carolyn Cohn

SAO PAULO/LONDON Feb 24 (Reuters) - Ukraine's dollar bonds rallimed on Monday on expectations the heavily indebted nation would receive aid from Western donors, while recovering investor sentiment helped Brazil's currency reach its strongest level in a month.

Ukraine, whose President Viktor Yanukovich was forced out of office at the weekend, said on Monday it needed $35 billion in foreign assistance over the next two years and appealed for urgent aid.

Investors were optimistic that Western organizations such as the International Monetary Fund would step in to help prevent a Ukrainian default now that Russia seems less likely to deliver the remaining $12 billion of a $15-billion bailout package agreed in December.

Ukraine's five-year credit default swaps (CDS) fell 166 basis points from Friday's close to a 3-week low of 941 bps, according to Markit. Ukraine's 2023 dollar bond rose 4.83 points to 89 cents on the dollar, according to Reuters data.

"Political considerations in this instance override economic or financial ones and ... Western aid is likely to be substantial enough to prevent a credit event from taking place in the short term," Goldman Sachs said in a client note, referring to the risk of default or restructuring in Ukraine.

Ukraine's 2017 dollar bond gained 4.0 points to 90 cents on the dollar, while the 2022 dollar bond rose 4.31 points to 89.125.

But the hryvnia fell to a five-year low. Analysts said the country is running out of foreign exchange reserves to support it and is likely to focus its use of funds on repaying dollar debt.   Continuación...