Ukraine dollar bonds slide as investors' hopes for ceasefire dim

By Libby George

LONDON, June 5 (Reuters) - Ukraine's international bonds slid by more than 2 cents on Thursday, as investors' hopes for an imminent ceasefire dimmed.

The bonds linked to economic output maturing in 2035 and 2036 fared the worst, shedding roughly 2.5 cents to bid under 43 cents on the dollar - returning to levels last seen in October, shortly before U.S. President Donald Trump won the U.S. election, Tradeweb data showed.

Fighting in the war, which began with Russia's full-scale invasion in 2022, has intensified in recent weeks.

In a Wednesday phone call between Russian President Vladimir Putin and Trump, the former warned that he would retaliate for Ukrainian drone attacks on Russia's nuclear-capable bomber fleet.

Ukraine's bonds surged at the end of last year, returning over 60%, boosted by Trump's promise to quickly negotiate a ceasefire.

But the talks have since stagnated, and Trump's commitment to finalising a deal has appeared to waive at times. Ukraine's international bonds have lost more than 10% since the start of the year, according to JPMorgan's EMBI global Diversified Index, the worst performer in emerging markets.

The 2035 and 2036 bonds that have an element linked to economic performance which originally got the biggest boost from the previous ceasefire optimism are now taking the biggest hit from fears that the war will drag on.