Adds cut-off of U.S. intelligence sharing, updates prices
By Libby George
LONDON, March 5 (Reuters) - Ukraine's international bonds rallied on Wednesday in volatile trading after U.S. President Donald Trump said Kyiv was ready to negotiate over the war with Russia.
The country's bonds have whipsawed in recent days, responding to Trump's statements and actions, including his freezing of U.S. military assistance, as he seeks an end to the war begun by Russia's full-scale invasion just over three years ago.
The 2035 maturity rallied by more than 1.70 cents before retracing to be bid at 62.12 cents on the dollar, 0.82 cents higher - with other maturities making similar gains.
CIA Director John Ratcliffe also said on Wednesday that the United States had cut off intelligence-sharing with Kyiv, a move that will impinge on Ukrainian military's effectiveness against Russian forces and underscores Trump's hard-line tactics to force Zelenskiy to make concessions.
The bonds returned over 60% in 2024 when Trump was elected to return to the White House, which investors attributed to his promises of a quick end to the conflict.
But his administration's decision to hold peace talks with Russian officials without Ukraine present and his explosive Oval office meeting with Ukrainian President Volodymyr Zelenskiy on Friday tested that optimism and drove bonds lower.
The bonds that will pay out more if future economic performance outpaces expectations have led both the gains and the losses. The 2035 maturity, while trading 7 cents below its February 14 peak, remains more than 14 cents above the level just before Trump's election victory last year.
Goldman Sachs calculations showed that market expectations for a strong rise in Ukrainian economic growth, which would require an end to the war, had declined by 10 percentage points since Friday. Based on the pricing of Ukraine's GDP-linked bond versus other instruments, the bank said the market was still pricing at least 40% odds of a peace deal.
(Reporting By Libby George; Editing by Karin Strohecker, Barbara Lewis and Mark Porter)
((Libby.George@thomsonreuters.com; +44 07527 061331; Reuters Messaging: libby.george@thomsonreuters.com))