Ukraine's bonds jump after Democrats' US midterm victory as investors bet on stronger support - Bloomberg
Ukrainian government bonds surged after Democrats won control of both chambers of the US Congress in the November 3 midterm elections, as investors bet that the result would strengthen Washington's support for Ukraine, Bloomberg reported on November 4.
Ukraine's dollar-denominated bonds carrying a 4.5% coupon and maturing in 2034 rose by more than one cent on the dollar to above 63 cents on November 4, their highest level in more than a month.
The country's bonds were among the best-performing emerging-market securities that day.
The price means investors were paying approximately 63 cents for each dollar of the bonds' face value, reflecting continued concerns about the risks associated with Ukraine's war with Russia and its future debt repayments.
What investors expect from the new Congress
According to Bloomberg, investors see the Democrats' victory as potentially improving relations between Kyiv and Washington after months of tensions with President Donald Trump.
"The market is now expecting that the new Congress may prevent any disruptions of intelligence sharing with Ukraine or the limiting of its access to the Starshield system," said Viktor Szabo, an investment director at Aberdeen Investments.
The election results could also affect the diplomatic landscape as US negotiators prepare to meet European and Ukrainian counterparts in Brussels ahead of another round of peace talks expected in Abu Dhabi next week.
However, Bloomberg cautioned that the impact on Trump's approach to the war remains uncertain.
Neil Shearing, chief economist at Capital Economics, suggested that Trump could seek to assert greater control over foreign policy as the Democratic-controlled Congress attempts to constrain his domestic agenda.
Trump could try to end the war quickly on terms more favorable to Moscow, Shearing warned, potentially increasing pressure on European countries to take greater responsibility for their own security.
The market rally therefore reflects investors' expectations of stronger US support for Ukraine, rather than any new military assistance already approved by Congress.