(Bloomberg) -- Ukraine’s dollar bonds jumped as Donald Trump’s pledges to accelerate an end to the war with Russia came into focus after he was re-elected as US president.
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The country’s GDP warrants, a kind of debt security with payouts linked to economic growth, traded above 73.6 cents on the dollar, their highest levels since Russia’s full-scale invasion in 2022, when the securities plunged to less than 15 cents.
Fund managers had already been buying Ukraine’s dollar bonds in recent weeks as a Trump presidency started to appear more likely. The notes on Wednesday were among the best performers in emerging markets by percentage gained as of 11:14 a.m. in London, according to data compiled by Bloomberg. Ukraine’s 1.75% notes due in 2035 rose 1.7 cents on the dollar to 47.2 cents.
“Bonds are reflecting the probability that the war could end sooner, rather than focusing on what shape that deal would look like,” said Thys Louw, a portfolio manager at Ninety One UK Ltd.
Ukraine bonds’ gains stood out among emerging markets, where currencies and stocks mostly sold off on the prospect that Trump could introduce punitive tariffs on trade. Eastern European currencies were among the hardest hit, with the forint trading at the weakest since late 2022.
Major Obstacles
Major obstacles remain to bringing Russia to the negotiating table with Ukraine. Russian troops have been advancing in the grinding war and the prospect of finding common ground for peace talks remains distant. Ukrainian President Volodymyr Zelenskiy has pledged to keep fighting, but his military is heavily reliant on US aid.
On Wednesday, Zelenskiy said Trump’s “peace through strength approach” to global relations could help end the conflict, adding that Ukraine relies on “continued strong bipartisan support” from the US.
Trump said during his election debate with Vice President Kamala Harris in September that he wanted the fighting to end, and would have the two countries’ leaders meet and work out a deal.
“I want the war to stop,” Trump said after being asked twice if he wanted Ukraine to win. “That is a war that’s dying to be settled. I will get it settled before I even become president.”
Gulf Remains
Both nations have so far insisted on ending the war on their own terms, with Ukraine’s president refusing any territorial concessions to Russia and Russian President Vladimir Putin refusing to give up plans to conquer the four Ukrainian regions Moscow claimed as its own in 2022.
Putin said in July that Russia takes Trump’s statements seriously that he has proposals to end the war quickly.
However, it remained unclear what immediate leverage Trump will have against Russia to force it to stop its offensive just when it started to make more gains, according to Ukrainian investment firm Dragon Capital.
“Achieving a genuine ceasefire may therefore become a longer-than-expected process,” it said.
--With assistance from Volodymyr Verbianyi and Daryna Krasnolutska.
(Updates after Trump victory was confirmed)
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