EEMEA Sovereign Credit Watch: UKRAINE: stay OW EXD – another 5-6 points upside in sight

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EEMEA Sovereign Credit Watch: UKRAINE: stay OW EXD – another 5-6 points upside in sight

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EEMEA Sovereign Credit Watch

UKRAINE: stay OW EXD – another 5-6

points upside in sight

We still like being Overweight 20 July 2026

We reiterate our Overweight view (see: Ukraine scenarios: rolling OW into 2026, Buy A35 GEM FI & FX Strategy

26 September 2025). Current valuations already reflect a significant portion of the Emerging Markets Global

medium-term risks and continue to offer an asymmetric risk-reward profile. Ukraine EXD Merveille Paja

remains one of the highest-yielding sovereign credits in the investable universe, which EEMEA Sovereign FI Strategist

continues to support its relative attractiveness. We still see more upside, despite the MLI+44 (UK)20 7996 6239

strong performance of the bonds this year, driven mainly by the unlocking of EU funding merveille.paja@bofa.com

and growing expectations of some form of geopolitical breakthrough. David Hauner, CFA >>

Global EM FI/FX Strategist

Up to 5-6 pts of upside in A bonds under the status quo MLI+44 (UK)20 7996 1241

david.hauner@bofa.com

The A35 bond price has risen from $51.8 at the end of March to approximately $71.5,

and its yield has fallen from 16.4% at the end of March to around 11.5% currently. Most VladimirEM SovereignOsakovskiyFI/EQ strategist>>

sovereigns emerging from distressed levels initially trade at CCC+ levels, with yields Merrill Lynch (DIFC)

+971 4 425 8291

around the 10% range. Against that backdrop, we believe this level represents a vladimir.osakovskiy@bofa.com

reasonable lower bound for Ukraine EXD under the current status quo, absent any Raghav Adlakha

geopolitical breakthrough. This implies an additional c.5 points of upside for the A35, EM Quant/Sovereign Strategist

MLI (UK)