Unexpected Trading Dynamics In Sovereign-Guaranteed Debt

What do Ukraine, Sri Lanka, and Ghana have in common? They've all guaranteed bonds that once traded at a sizeable discount to their sovereign counterparts.

In the months since Russia commenced "special military operations" in late February of this year, much of the world has watched Russia's full-scale invasion of Eastern Ukraine with horror. As that invasion has dragged on into its fifth month, much attention has been paid by financial markets and the press to the impact of the Russian invasion on Ukraine's sovereign bonds and GDP warrants. That scrutiny will doubtlessly intensify in coming months as holders seek to organize in advance of an upcoming $900mm maturity in September. Comparatively less focus has been devoted, however, to Ukraine's billions of dollars of guaranteed obligations, and to one $700mm Eurobond issuance in particular.