(Bloomberg) -- Ukraine’s dollar bonds offer notable upside as the nation remains on track to agree a restructuring deal with creditors following a breakthrough on a $61 billion US aid package, according to strategists at BofA Securities.

The notes have been weakening across the curve as bondholders face tough talks with the war-torn nation about another overhaul. The parties will have to secure a deal before the end of August, when a two-year payment freeze agreed by holders of $20 billion of outstanding bonds ends. 

“The breakthrough with the US aid to Ukraine in the US House over the weekend delivered one of the two key triggers for our positive view on Ukraine,” BofA strategists including Merveille Paja wrote in note. “We continue to believe that the next trigger could be the successful conclusion of the restructuring, which remains our baseline.” 

Several serious risks remain, BofA said, even aside from the prospect of the war continuing into next year. One is whether Ukraine will be in the position to pay any coupons in the coming years. The other is whether part of the payments will be linked to Ukraine’s economic performance.

Current Pricing

The nation’s hard-currency notes due in 2034 dropped 0.3 cents on the dollar to 25.4 cents by 10:38 a.m. in London, extending its decline to a seventh day, the longest losing streak since October.

“We now see fair value as between $28-33, which leaves notable upside to current pricing,” BofA said.

“We understand that the plan is to conclude the restructuring negotiations before the IMF Board meeting in late June,” the strategists said. “The program requires that a restructuring must be completed before the end of the standstill, and an extension of the standstill isn’t an option.” 

Read more: Ukraine May Seek to Postpone Bond Payments Until 2027: Concorde

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