Posts tagged 'Ukraine'

Moratorium on Moscow?

On May 28, Ukraine will pay $88m in interest on its $2.25bn bond due 2022.

On June 20, it will also pay a $75m coupon on that $3bn bond owed to Russia.

Well, we say ‘will.’

This might get in the way first: Read more

And then there were four, Ukraine bonds edition

Back in April, five leading owners of Ukrainian bonds formed a committee to negotiate a restructuring with their debtor – and avoid losing money on their approximately $10bn principal in the process.

Now count the names in this release on Monday… Read more

Guest post: Getting Ukraine’s bondholders from B to A

The English-law bonds in Ukraine’s debt restructuring are a bit more local-law than bondholders might realise. How can Ukraine use that to get a deal? Here’s an interesting idea… Read more

A little Ukrainian bond list

There have been a few doubts lately about whether Ukraine was going to include that $3bn Russian bond, issued in 2013 and maturing this year, in its debt renegotiation with private creditors.

Well, over to a resolution by the embattled country’s Cabinet of Ministers… Read more

Is Ukraine’s Russian bond ‘official’ debt or not?

Update: Seems we were right to regard this as curious…

Late on Thursday the IMF walked back on the idea the Russian bond is official debt, per ReutersRead more

Ukraine’s bonds: a little local leverage

The Russia problem aside, Ukraine’s other big task in its $15bn debt restructuring will simply be to convince private bondholders that it’s a deal worth taking.

One way to do that is for bondholders to realise they are dealing with a government burdened with the costs of war and as it happens, increasingly absorbed in an intense lustration campaign.

But some of them (quite possibly one that lives in San Mateo, CA) could have holdings large enough to block a bondholder vote. So, even if Natalie Jaresko, the Ukrainian finance minister, does like to quote Margaret Thatcher about there being no alternative… the new bond terms will need to justify taking a massive haircut compared to holding out for full payment.

Another way to do it? Note how ripe for abuse the old bond terms are.

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When Lee Buchheit, Ignacio Tirado and Mitu Gulati were looking deep within the innards of Cypriot government bonds just over two years ago — shortly before the climax of the island’s debt crisis — they found something exciting. Read more

Stopping a Russian bond invasion

All it took was 11 days — and one schtum Kremlin spokesman — to make people wonder recently just how strong and secure a ruler Vladimir Putin really is.

They might want to look inside his Ukrainian bonds next. Read more

Sovereign debt reprofiling: Ukraine’s lesson for the IMF

This week’s $40bn IMF programme announced for Ukraine will include some restructuring of its debt. Gabriel Sterne, head of global macro research at Oxford Economics, points out that it comes at an interesting time for the fund’s policy on restructuring.

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The IMF’s proposals to change its policy on sovereign debt reprofiling have divided opinion, with FT Alphaville providing a debating platform between supporters (for example here and here) and sceptics including myself (for example here and here).

The proposals are motivated by the objective of providing a fund programme breathing space to work when it is unclear if debt is unsustainable. Read more

From Russia with bonds

Ukraine will probably end this year with public debts over two-thirds the size of its economy. We won’t know the exact figure until March when official statistics come out, nor if those statistics will be able to count the GDP of the separatist east.

But it is not looking good. We thought this rated a reminder.

Because the President of Russia certainly hasn’t forgotten about it — or the unusual clause inserted into the language of a $3bn bond Ukraine owes to his government: Read more

Ukraine — call the sovereign debt cops

. . .Which is an announcement by the Ukrainian Security Service on Thursday that it has opened an criminal investigation into just how Ukraine managed to sell $3bn of some curious bonds to Russia in the last months of Viktor Yanukovych’s government. Read more

In Putin’s Russia, financial plumbing blocks you

Sam Jones (formerly of this parish) writes in the FT about how the conflict in Ukraine has revealed the capacity for a new type of warfare.

This is one that has “exploded the notion that expansive communications technologies and economic interdependence were fostering a kind of grand bargain.” Against it, the great power arrayed on the other side can do little, despite its considerable conventional might.

Quite so. Take, for example, this story from Bloomberg on Friday… Read more

Ukraine, war, and sovereign default

Ukraine claimed at pixel time to have fired on a number of Russian tanks crossing its borders.

Being invaded by Russia is not very conducive to a country’s GDP. But also, bizarre as it seems if its armour really is aflame in the Donbas, Russia is also the owner of Ukrainian sovereign debt. This has some precarious terms (for the borrower) restricting growth in debt to GDP to below 60 per cent. Read more

Best keep an eye on @courtneymoscow…

Here’s some Tina Fordham while we await developments… Read more

Sell Rosneft, buy AK-47s

From the US Treasury’s Office of Foreign Assets Control on Wednesday:

The following transactions by U.S. persons or within the United States involving the persons listed below are hereby prohibited: transacting in, providing financing for, or otherwise dealing in new debt of longer than 90 days maturity of these persons (listed below), their property, or their interests in property…

Note that wording carefully. “US persons” could extend beyond the US. Meanwhile “new debt of longer than 90 days maturity” could extend beyond US dollar debt.

It does not, however, include US dollar clearing generally, the US Treasury says. Nor, it seems, CDS which references prohibited underlying debt.

Now note whose debt — not all transactions; debt — US banks, US clearing systems, and US investors may be prevented from dealing with accordingly: Read more

About that Ukrainian bond Russia owns…

Russia says Ukraine hasn’t paid interest due June 20 on that $3bn eurobond.

Ukraine said on Thursday that it had. Read more

Ukraine, Gazprom, and the full faith and credit

How many sovereign debtors get to be both in hock to the Russians, and using the United States’ full faith and credit to borrow fresh money?

Though we suppose Ukraine’s a special case: Read more

It’s Mostly Fiscal, Ukraine edition

The currency devaluation and official borrowing (to help finance a still-wide government deficit) are expected to push public sector debt up to 57 percent of GDP…

IMF announcement of $17bn loan programme for Ukraine

Although don’t worry — that’s a whole 3 per cent before a unique debt threshold clause conceivably allows the Russian government to convert $3bn of Ukrainian bonds, which it owns, into demand money. Read more

Capital controls, Ukraine style

From the National Bank of Ukraine:

15.04.2014 press release

The National Bank has passed the decision to temporarily disconnect 14 banks from the System of Confirming the Agreements in the interbank foreign exchange market. The regulator resorted to this measure given the actions undertaken by these banks in the foreign exchange market that have a destabilizing effect on of the hryvnia exchange rate and create negative expectations about the future hryvnia exchange rate dynamics.

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Putin’s gold level: $1300/oz

Not much market reaction yet to reports of an “anti-terrorist operation” in Ukraine apart from gold, which had broken through a key resistance level before Russia said that its neighbour is close to civil warRead more

Guest post: What if Putin had bought Crimea?

The prospect of selling any sovereign territory to resolve disputes may seem like a taboo — especially so when it comes to the conflicted territory of Crimea. However, Joseph Blocher and Mitu Gulati, both law professors at Duke University, argue that such a “market” should in future be considered in public international law.

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Credit ratings are weird, Crimea edition

Ho ho Standard & Poor’s, very clever, but we saw right through your April Fool’s joke.

First, the parody of lifeless regulatory jargon here is just a little too carried away: Read more

Bank flowchart + geopolitics = acid trip

At least Nomura acknowledge the absurdity… anyway, all Ukrainian roads lead to political uncertainty.

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Crimeanomics favours the West

This guest post on the Ukraine crisis is from Jorge Mariscal and Alejo Czerwonko, emerging markets chief investment officer and emerging markets economist, respectively, at UBS Wealth Management.

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“TIMCHENKO, Gennady… Geneva, Switzerland” (UPDATED)

There’s a familiar name on the latest Specially Designated Nationals List in the US sanctions against Russia…

TIMCHENKO, Gennady (a.k.a. TIMCHENKO, Gennadiy Nikolayevich; a.k.a. TIMCHENKO, Gennady Nikolayevich; a.k.a. TIMTCHENKO, Guennadi), Geneva, Switzerland; DOB 09 Nov 1952; POB Leninakan, Armenia; alt. POB Gyumri, Armenia; nationality Finland; alt. nationality Russia; alt. nationality Armenia (individual) [UKRAINE2]… Read more

Guest post: Ukraine’s debt — now comes the interesting bit

When your creditor takes some of your territory — can you make that territory take some of your debt? Mitu Gulati, a law professor at Duke University, last wrote for us on Russia’s $3bn Ukrainian bond. With Russia reinforcing its annexation of Crimea, Mitu considers Ukraine’s options with its debt after the secession.

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In Putin’s Russia, risk prices you

Or, why investors might be less than sanguine about sanctions against Russia.

We could start with the OFZs.

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Guest post: Mr Putin’s clever bond issue

What to do when your creditor invades? Beyond its occupation of Crimea, Russia remains a lender to Ukraine — even as IMF teams ponder the Kiev government’s financial sustainability. Mitu Gulati, a law professor at Duke University, considers both sovereigns’ options.

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IAMA G8 leader contemplating invasion. Ask me anything.

Vladimir Putin’s gave his first official address on the Ukraine crisis on Tuesday.

Among the key points made (via Reuters, and emphasis on our favourite snap):

RUSSIA’S PUTIN SAYS USE OF FORCE IN UKRAINE IS A CHOICE OF LAST RESORT

PUTIN SAYS RUSSIA RESERVES RIGHT TO USE ALL OPTIONS IF THERE IS LAWLESSNESS IN EASTERN UKRAINE

RUSSIA’S PUTIN SAYS THOSE CONSIDERING SANCTIONS SHOULD THINK OF THE DAMAGE THEY MAY INCUR

RUSSIA’S PUTIN SAYS ALL THREATS AGAINST RUSSIA ARE “COUNTERPRODUCTIVE AND HARMFUL”

PUTIN SAYS RUSSIA READY TO HOST G8, BUT IF WESTERN LEADERS DON’T WANT TO COME “THEY DON’T NEED TO”

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Dead catski bounce?

Micex edition:

Depends on how confident you are that the market and economists can predict Putin’s next move, we suppose. Read more

The economic consequences of geopolitics

Clear enough where Russian assets are concerned at least… the CBR has gone to war just hiked by 1.5 percentage points to put a stop to the rouble’s tumble.

From Reuters:

The central bank did not mention Ukraine in its statement, but said the decision to raise rates was aimed at preventing “risks to inflation and financial stability associated with the recently increased level of volatility in the financial markets”…

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