Ukraine's bonds slide as war worries overshadow US aid relief

Ukraine's government bonds slipped on Monday as concern about the ongoing war and debt-restructuring wiped out initial investor relief over the approval of a $61 billion U.S. aid package.

Ukraine's government bonds slipped on Monday as concern about the ongoing war and debt-restructuring wiped out initial investor relief over the approval of a $61 billion U.S. aid package. The U.S. House of Representatives passed the funding on Saturday, ending a six-month impasse during which Russia regained the upper hand in some of the key battlegrounds in the more than two year-old war.

Ukraine's main government bonds initially ticked higher but stumbled roughly a cent in early U.S. trading to set one-month lows. "It's great that the money is coming through, but I don't think it's a game-changer (for investors)," Paul McNamara, an investment director of emerging market debt at fund manager GAM, said.

"The big concern at the moment is that the military situation has tilted against it again, which is keeping everything in doubt." Sources told Reuters over the weekend that Kyiv planned to lay out a debt restructuring plan within the next two months, but investors are concerned it will be unable to do so if it is still engulfed in war.

A two-year debt payment freeze agreed shortly after the 2022 invasion began will end in August, although it could be extended if both sides agree. Most of Ukraine's bonds are trading at between 25 and 33 cents on the dollar, or between a quarter and third of their original face value.