Ukraine’s GDP-linked warrants “must be the world’s best performing debt instrument this year,”


Ukraine’s GDP-linked warrants “must be the world’s best performing debt instrument this year,” writes Timothy Ash, a senior sovereign analyst for Blue Bay Asset Management in London. Their price has gone from 58 cents in January to just below 95 cents today, with forecasts taking them up to $1.50. The warrants kick in if Ukraine’s 2019 GDP growth goes over 3%, a highly likely event. With complicated payout formulas, the warrants are destined to prove costly to Ukraine in the 2020s. The solution will be for the Finance Ministry to start to buy backs and swaps. Ash writes: “With price appreciation, the cost of buybacks is increasing all the time – indeed from $1.8 billion back in January to something close to par now, or close to $3.5 billion.