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Ukraine’s sovereign bonds have surged in price as investors bet that the incoming US administration will push for a quick end to the war with Russia.

The dollar-denominated bonds have risen 12 per cent in the past month, in expectation that the re-election of Donald Trump will lead to a ceasefire and boost Ukraine’s capacity to repay creditors.

The jump in the price of Ukrainian bonds, which one investor in the country called “the unlikeliest Trump trade ever”, comes as bets relating to the new administration have swept global financial markets in recent weeks.

Trump has said he will end the war in Ukraine “within a day” of returning to the White House, though he has not offered specifics on how this would be achieved.

The rally has come just over two months after Kyiv completed a restructuring of more than $20bn of debt in one of the fastest and biggest sovereign debt workouts in modern history.

Bond investors are betting that the country will be prepared to accept a peace deal that involves permanently giving up territory it has lost in the war, and that its economy will recover quickly in the years ahead.

“The main part of the trade has really been based on the war ending, or at least the possibility of Trump pushing through the start of negotiations,” said Thys Louw, portfolio manager at Ninety One, which owns some Ukrainian bonds.

Among investors to own significant holdings of Ukrainian debt is fund manager BlackRock, which was a member of the bondholder committee that led the restructuring talks. BlackRock declined to comment.

Ukrainian debt has outperformed emerging market indices since mid-October, when markets began to price in a Trump election victory.

Ukraine’s bond maturing in 2036 has risen from 44 to 49 cents on the dollar over the past month. So-called “GDP warrants” — debt securities issued under an older debt restructuring that will benefit from the country’s return of growth — having climbed even more sharply.

A bond owed by Ukrenergo, Ukraine’s state grid operator, has rallied more than 160 per cent this year to 67 cents on the dollar, despite renewed Russian attacks on infrastructure.

London-based hedge fund firm Shiprock Capital has profited from the jump in the warrants and Ukrainian corporate debt and is up 31 per cent this year to the end of October, according to an investor letter seen by the Financial Times.

Shiprock did not respond to a request for comment.

During the early stages of the war, bondholders agreed to a halt on Kyiv’s interest payments. The September restructuring, which is designed to pave the way for Ukraine’s return to bond markets, ended the two-year freeze.

Under the September deal, investors agreed to take losses of more than a third on their bonds to help Ukraine control its surging wartime deficits — years before official creditors such as the UK, the US, Germany and Japan are set to restructure their own debts.

In return for agreeing to accept upfront losses, bondholders were also given the chance to receive higher payouts if Ukraine’s war-ravaged economy beats growth targets in the years ahead.

Some investors have cautioned that the outlook for Ukraine’s bonds is far from clear.

Mohammed Elmi, a portfolio manager at Federated Hermes, said he was sceptical of the market’s belief in Trump’s ability to secure a rapid peace deal.

“I don’t fully subscribe to that kind of bullish view,” he said. “There is still a significant amount of unanswered questions” about where a settlement would leave Ukraine’s postwar economy and whether it would be a priority for the new US administration.

“Trump has a lot to do, with a big policy agenda to go through. These negotiations could also be quite prolonged,” he said.

Lawmakers on Capitol Hill reacted to the news that President-elect Trump intends to nominate Rep. Matt Gaetz, R-Fl., to be attorney general with a mix of support, disbelief and silence Wednesday.

Sen. Susan Collins, R-Maine, said she was “shocked” to hear Gaetz was tapped to lead the Department of Justice.

“Obviously the president has the right to nominate whomever he wishes,” Collins said. “But this is why the Senate’s advise and consent process is so important.”

“I’m sure that there will be many, many questions raised at Mr. Gaetz’s hearing, if in fact the nomination goes forward,” she added.

The confusion deepened after House Speaker Mike Johnson, R-La., told reporters that Gaetz had resigned his seat in Congress, effective immediately. It is uncommon for lawmakers to resign after being nominated, typically they wait to step down until after they are confirmed.

“I think out of deference to us, he issued his resignation letter effective immediately,” Johnson said, adding that the early resignation would speed up the process of holding a special election to replace him.

If confirmed, Gaetz, 42, would take the helm of a department that as recently as last year was investigating him for possible sex trafficking offenses. Ultimately, prosecutors recommended against bringing charges against him after a long-running probe.

Gaetz also faced an House Ethics Committee investigation related to sex trafficking and drug allegations that ended when he resigned his position on Wednesday.

When asked about the GOP concerns about the nomination, incoming Senate GOP Leader John Thune, R-S.D., said “that’s probably a good question for the chairman of the Judiciary Committee.”

Alaska Sen. Lisa Murkowski is among those raising questions. She told reporters in the Capitol that she is concerned about the number of open investigations surrounding Gaetz.

“I’m surprised by this particular nomination and perhaps some of the others, which, again, were not names that most of us would have have thought to be out there,” Murkowski said. “But President Trump, if he is not one thing, He is his own person and and advancing his ideas.”

Republican Sen. Joni Ernst, R-Iowa, did not indicate her thoughts on the nominee but said “he’ll have his work cut out for him.”

Republicans will hold 53 seats in the upcoming Congress after last week’s elections, meaning Gaetz can only lose three votes from his own party if he hopes to be confirmed.

A rank and file Republican in the House of Representatives, speculated on his odds bluntly: “It’s an obvious throwaway nomination that has no chance in the Senate.”

But the skepticism is also nuanced. Fellow Trump ally, Sen. Lindsey Graham, R-S.C., said he is “inclined to support” Trump’s cabinet picks, but admitted some “surprise” at Gaetz’s nomination.

“Confirmation hearings will be important. [Gaetz] will have some tough questions to answer,” Graham predicted.

Florida Sen. Marco Rubio, who Trump has tapped to serve as secretary of state, said he has “known Matt a long time,” and thinks he “would do a good job.” Rubio added he expects Gaetz would be confirmed.

“Presidents deserve great deference, as president [he has] a mandate and he has a right to surround himself with people he trusts, especially in a position that important,” he sai

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Your guide to what the 2024 US election means for Washington and the world

Republicans have won a majority in the House of Representatives, giving Donald Trump’s party full control of both chambers of the US Congress and wide latitude to push a radical agenda through the legislature.

Democratic House leader Hakeem Jeffries congratulated Republican Speaker of the House Mike Johnson late on Wednesday, after several TV networks projected Trump’s party would retain control of the House.

“House Democrats gave it our all, running aggressive, forward-looking and people-centred campaigns,” Jeffries said. “While we will not regain control of the Congress in January, falling just a few seats short, House Democrats will hold Republicans to a razor-thin majority.”

The House verdict comes more than a week after Trump won a convincing election victory over Kamala Harris in the presidential race and means that when he is inaugurated in January his party will control the House and Senate.

The unified government will hand Trump considerable freedom to push through his legislative agenda, including plans to renew and expand sweeping tax cuts.

The House result, which came after more than a week of counting in California and other states, is a blow to Democrats, who will be minorities in both the Senate and House and unable to lead powerful congressional committees to oversee investigations into the Trump administration’s actions.

Eleven House races have still yet to be called, and the margin of the Republican majority has yet to be confirmed. But TV networks declared Trump’s party would keep control of the House because Republicans had secured the 218 seats necessary to have a majority in the 435-member body. The Financial Times’ tally of House results, which is based on race calls by the Associated Press, showed Republicans still one shy of the majority at 6.45pm on Wednesday.

Republicans will also have a firm grip on the Senate — where Democrats have held a slim majority in the current Congress — after picking up four seats in Pennsylvania, Ohio, West Virginia and Montana.

Republican senators on Wednesday elected John Thune to replace Mitch McConnell as the party’s leader in the upper chamber. McConnell, 82, remains a senator but said last year he would step down from leadership following a series of health issues.

Johnson, the Republican congressman from Louisiana and close ally of Trump who became Speaker last year, has said he intends to remain in the role.

Trump also presided over a unified government in the initial two years of his first administration, in 2017 and 2018, before Democrats won back control of the House in the 2018 midterm elections.

But many in Washington expect Trump to exert a tighter grip on Congress this time around, given the unwavering loyalty he commands from many top lawmakers, including the leaders of both chambers. In his first administration, he often faced opposition from McConnell and then-Speaker Paul Ryan.

Still, Trump will not have unchecked power over Congress, and Democrats may be able to exert leverage over his administration in narrow but meaningful ways.

Although budget and tax changes require only a simple majority of both chambers, and the president’s appointments can also be confirmed with the backing of 50 senators, most other legislation will need to break the Senate filibuster — a 60-vote threshold — to become law.

That means Senate Democrats could block other Trump legislative priorities — including laws to crack down on immigration at the US-Mexico border, or repeal the Affordable Care Act, commonly known as Obamacare — unless Senate Republicans take the drastic step of scrapping the filibuster altogether. Thune on Wednesday said the filibuster would be “unchanged” so long as he was Senate majority leader.