Ukraine’s metrics improve since Russia invasion
Changes to Ukraine since the start of the war with Russia have meant Ukraine has become a more investable country than previously, according to VanEck.
Prior to the war, VanEck did not hold any exposure to Ukraine but Eric Fine, head of active emerging market debt, said that the country’s metrics had improved since the invasion.
“Under our investment process, the country has improved on the metrics that had constrained us from owning it; its policy/politics score is improving.
“Our process considers and incorporates non-systematic risks like a war. The reason Ukraine’s policy/politics score has improved is that there has been an outpouring of international support for Ukraine that dwarfs its external financing requirements.
“Not only is Ukraine already financed by official creditors, but the amount of financing that looks to be in the pipeline as a reaction to Ukraine’s invasion dwarfs current financing.”
This included a consideration by the US Congress to provide US$6-10 billion, US$1.4 billion from the International Monetary Fund through a Rapid Financing Instrument and a welcoming of its application to join the European Union (EU) which would provide significant funding.
While military spending could increase, this would likely be financed by Germany and the EU while reconstruction costs would be covered by multilateral agencies.
“While the region remains in conflict, we continue to actively manage our emerging markets bond portfolio in line with our philosophy. We believe an optimal portfolio of emerging market bonds is unconstrained by indices, and invests in bonds that offer the best value relative to their fundamentals while managing risk,” Fine concluded.
AUTHOR
Laura Dew
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
