World News: Ukraine bonds sink into distress, Russia drops as tensions bite – Gulf Digital News

World News: Ukraine bonds sink into distress, Russia drops as tensions bite – Gulf Digital News

London: Ukrainian sovereign dollar bonds slipped into distressed territory and Russian bonds suffered sharp falls on Monday as geopolitical tensions between the two countries showed no sign of easing.

The premium investors demanded to hold Ukraine bonds over safe-haven U.S. Treasuries as measured by the JPMorgan EMBI Global Diversified index blew out to 1,001 basis points. Less than a dozen countries in the 70-plus strong index have spreads wider than 1,000 bps indicating payment stress or an actual default, with the likes of Venezuela, Zambia, Lebanon as well as Sri Lanka and Ghana in that category.

"The market has to price in some kind of probability of Russia invading," said Viktor Szabo at asset manager abrdn.

The United States last week said it feared Russia was preparing a pretext to invade Ukraine if diplomacy fails to meet its objectives, after a massive cyberattack splashed Ukrainian government websites with a warning to "be afraid and expect the worst". Talks between Moscow and Western states on Russia's deployment of tens of thousands of troops along Ukraine's border ended with no breakthrough last week.

Russia denies plans to attack Ukraine and has demanded NATO stop its eastward expansion.

Ukraine's spreads have risen some 240 bps year-to-date and