[Aaus-list] Ukraine and its debt deal

Max Pyziur pyz at brama.com
Thu Aug 27 12:38:52 EDT 2015


Ukraine Wins Debt Relief as Russia Refuses to Join Agreement
http://www.bloomberg.com/news/articles/2015-08-27/ukraine-reaches-restructuring-deal-with-20-writedown-to-bonds

"Maturities to be pushed back by four years, coupons at 7.75%"
"Russia rejects request to accept new terms on $3 billion bond"

"Finance Minister Natalie Jaresko reached an accord with a Franklin 
Templeton-led creditor committee that includes a 20 percent writedown to 
the face value of about $18 billion of Eurobonds, the first of which 
matures in less than a month. Representatives for creditors said they 
couldn’t immediately comment. Bonds surged the most on record. Ukraine 
said it is offering the same terms to Russia, which holds a $3 billion 
bond due in December. Finance Minister Anton Siluanov reiterated that 
Russia won’t participate in the restructuring."

"Poroshenko is seeking to meet the conditions of emergency assistance from 
the International Monetary Fund, ..."
This means that Ukraine is on IMF life-support. No illusions.


Christine Lagarde, er, the IMF approves
Statement by IMF Managing Director Christine Lagarde on Ukraine
Press Release No. 15/390
August 27, 2015
http://www.imf.org/external/np/sec/pr/2015/pr15390.htm

"The announced parameters of the agreement will help restore debt 
sustainability and - together with the authorities' policy reform efforts 
- will substantively meet the objectives set under the IMF-supported 
program. "

Keywords: " ... will help ... ." Meaning: this isn't the end of this 
particular rodeo.

... and then crowd roared back:


Mohamed A. El-Erian ‏@elerianm tweeted:
While “officialdom” welcomes deal between #Ukraine and bond holders, the 
terms risk falling short of what’s needed for #debt #sustainability
https://twitter.com/elerianm/status/636928010118000640


Ukraine Seen Kicking Can Down the Road With Debt Deal: Analysts
http://www.bloomberg.com/news/articles/2015-08-27/ukraine-seen-kicking-can-down-the-road-with-debt-deal-analysts

"20 percent principal cut seen as `soft' by Societe Generale"
"IMF growth targets were too optimistic: Union Investment"

"Michael Ganske, head of emerging markets at Rogge Global Partners in 
London: 'A 20 percent haircut is moderate. Whether the deal is enough to 
bring Ukraine back to debt sustainability is questionable and obviously 
debt sustainability will be also determined by Ukraine’s macro development 
going forward.'"

... which means there is an awful lot of restructing and consolidation 
that has to take place in-country.


Back to you Chet.


MP
pyz at brama.com


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