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Ukraines dollar bonds headed for the biggest weekly slump on record as Prime Minister Arseniy Yatsenyuk hastened to form a government in a bid to secure financial aid to keep the country afloat.

The yield on the dollar-denominated bonds maturing July 2017 rose 48 basis points to a record 19.81 percent by 4:01 p.m. in Kiev, extending this weeks increase to 2.68 percentage points, the most since the bond was first sold in 2012. The rate on the countrys April 2023 Eurobonds jumped 19 basis points to 12.96 percent, rising for a fifth day.

Yatsenyuk, who was confirmed by lawmakers yesterday after a month of wrangling since elections were held, has little time to pass next years budget and secure international aid. A mission from the International Monetary Fund said it would continue discussions on the next installment of a $17 billion bailout after a government is formed. That may happen on Dec. 2, according to parliamentary Speaker Volodymyr Hroisman.

Financial meltdown might be imminent, Tim Ash, the London-based chief economist for emerging markets at Standard Bank Group Ltd. said by e-mail. The West is caught between a recognition that much more urgent action is needed and a desire to set conditions on further disbursements, he said.

Ukraine needs cash to redeem bonds, pay for heating fuel and bolster its currency. The central bank scrapped its target exchange rate of 12.95 per dollar on Nov. 3 after spending $1.2 billion to prop up the hryvnia in October. That cut its reserves to a nine-year low of $12.6 billion, a decline of almost 40 percent since the start of the year. The benchmark interest rate was raised to a 13-year high of 14 percent on Nov. 12 to stem the hryvnias slide.

The currency strengthened 0.1% to 15.0095 per dollar today as the central bank sold $3 million at its daily auction, less than the $5 million at previous sales this week. Rates at 15-16 hryvnia per dollar are caused by panic among the population and businesses, central bank Governor Valeriya Gontareva said Nov. 25.

Ukraines credit-default swaps are the highest worldwide after Venezuela, data compiled by Bloomberg show.

The European Union expanded an asset freeze and travel ban against separatists in the countrys east to 13 persons and five entities, the bloc said in a statement today. The decision brings the number of people subject to sanctions to 132 and the number of entities under an EU asset freeze to 28.

To contact the reporter on this story: Marton Eder in Budapest at meder4@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net Chris Kirkham, Zahra Hankir

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Ukraine Bonds Set for Worst Week on Record Amid Cash Squeeze