LONDON (Reuters – Ukrainian sovereign currency bonds fell into trouble territory, while Russian bonds experienced sharp losses on Monday because of geopolitical tensions.

Premium investors wanted Ukraine bonds to be held over U.S. Treasuries. This was measured using the JPMorgan (NYSE) EMBI Global Diversified Index. It soared to 1,001 basis points. Spreads greater than 1,000bps have been recorded by less than 12 countries within the index of 70+ strong nations. This indicates payment stress and/or an actual default.

Viktor Szabo, abrdn’s asset manager said that the market should price in the possibility of Russia invading.

After a huge cyberattack that flooded Ukrainian government websites, the United States said last week it was concerned Russia would use this pretext to invade Ukraine. The West and Moscow did not reach an agreement last week on Russia’s plan to deploy tens or thousands of troops near Ukraine’s frontier.

Russia has denied plans to attack Ukraine, and demanded that NATO stop expanding its eastern borders.

Spreads in Ukraine have increased by 240bps over the past year and now stand at levels that were last reached during the peak of the COVID-19 March 2020 market crash. The spreads also compare to the levels that were seen when Russia invaded Crimea in spring 2014. However, spreads rose to more than 4,000bps by early 2015. When Kyiv was forced into default, however.

Tradeweb data revealed that Ukraine’s short-dated dollars bonds fell more than three cents per dollar. Many traded in the middle-80s cents. Bid-ask spreads increased to over one cent on many issues, which indicates a lack of liquidity.

Stuart Culverhouse, Tellimer, stated that Ukraine has likely lost market access and could make financing difficult this year.

Russian long-dated dollars bonds suffered the same pain. According to Refinitiv data, the 2043 bond fell more than five cents to 109.98cs. Many bonds are now trading at their lowest levels since the pandemic. Spreads over U.S. Treasuries rose to 238 bps, an increase by 71 bps in this year.

The five-year credit default swaps for (CDSs) of both countries increased again. Ukraine’s CDS rose 26 basis points to 868 bps on Friday, according IHS Markit data. Russia rose 8 basis points to 185bps.