Ukraine Bonds Slide After Air Attack Accusations With Russia

Ukraine Bonds Decline Following Russia Air Attack Allegations

By Karin Strohecker and Rodrigo Campos

LONDON/NEW YORK (Reuters) -Ukraine's international government bonds pared steep losses on Wednesday after a "positive" call between Ukrainian President Volodymyr Zelenskiy and U.S. President Donald Trump followed accusations between Russia and Ukraine of launching air attacks.

Longer-dated maturities suffered the biggest declines, with the 2036 issue down 2.08 cents to 60.854 cents, having earlier fallen more than three cents to a six-week low, Tradeweb data showed.

Zelenskiy and Trump had on Wednesday a "very substantive and frank" phone call, according to the Ukrainian president, in which he confirmed his country's readiness to halt strikes on Russian energy infrastructure.

The Wednesday call with Ukraine followed a call the previous day between Trump and Russian President Vladimir Putin, in which Moscow declined to endorse a full 30-day ceasefire.

"Markets probably have reacted right, this idea that there will be a peace deal in Ukraine, I think, is farfetched," said Mehill Marku, lead geopolitical analyst at PGIM Fixed Income.

"Markets are starting to realise increasingly now that how Putin thinks about reaching a peace deal is completely different from what Europeans and even the United States think."

Ukrainian dollar bond prices rose some 40% from October to February on bets that a Trump administration would speed a wind-down of the three-year war, but lack of advances and a raucous Trump-Zelenskiy meeting in the White House stalled the rally in February.

(Reporting by Karin Strohecker and Rodrigo Campos; Editing by Amanda Cooper, Mark Potter and Rod Nickel)