Unlike many of the proxies discussed in recent posts (here, here, and here), Morgan Stanley's Simon Waever says Ukraine's external USD sovereign bonds are the most direct way to implement a view on a potential ceasefire while still maintaining a liquid asset.
Today, following a strong recent performance, wMorgan Stanley estimates the bonds are pricing just under a ⅔ probability of a credible ceasefire, which leads to a stabilisation in Ukraine's macro fundamentals. While this suggests it's too soon to sell into the recent move, it does require more concrete progress on a credible ceasefire to see bonds move higher in price from here.
Debt restructuring and near-term financing in place: Ukraine finalised the biggest share of its sovereign debt restructuring in 2024, namely restructuring all its sovereign USD and EUR-denominated bonds into new USD instruments that settled on August 30th. Some commercial loans, SOE bonds and potentially the GDP warrants remain to be restructured, yet the bulk is now done.
