Trump’s Re-Election Boosts Ukraine Bonds, But Obstacles to Peace Remain

Ukrainian dollar bonds surged on Wednesday, following Donald Trump’s re-election as US President, with investors betting on his promise to accelerate an end to the war with Russia, Bloomberg reports.

The country’s GDP warrants, a type of debt security linked to economic growth, traded above 73.6 cents on the dollar, reaching their highest levels since the start of Ukraine conflict in 2022. These securities had plummeted to less than 15 cents at the outset of the conflict.

Fund managers had already been buying Ukrainian bonds in recent weeks as Trump’s re-election became more likely. On Wednesday, these bonds were among the top performers in emerging markets, with Ukraine’s 1.75% notes due in 2035 rising 1.7 cents on the dollar to 47.2 cents.

However, Ukraine’s gains stood in stark contrast to other emerging markets, where currencies and stocks generally fell on the prospect of Trump introducing punitive tariffs on trade. Eastern European currencies were particularly affected, with the Hungarian forint hitting its weakest point since late 2022.

Despite the optimism surrounding Trump’s re-election, major obstacles remain to bringing Russia to the negotiating table with Ukraine. Russian troops continue their advance in the grinding war, and the prospect of finding common ground for peace talks seems distant. Ukrainian President Volodymyr Zelensky has pledged to keep fighting, but his military relies heavily on US aid.

Zelensky welcomed Trump’s “peace through strength approach” to global relations, believing it could help end the conflict. He emphasized Ukraine’s reliance on “continued strong bipartisan support” from the US.

During his election debate with Vice President Kamala Harris in September, Trump stated his desire to end the fighting, suggesting a meeting between the leaders of both countries to work out a deal.

Both nations have so far insisted on ending the war on their own terms. Zelensky has refused any territorial concessions to Russia, while Russian President Vladimir Putin has refused to give up his plans to conquer the four regions Moscow claimed as its own in 2022.

Putin expressed in July that Russia takes Trump’s statements about ending the war quickly seriously.