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:
On Tuesday, the Ukrainian government announced it would send a draft bill post-haste to the Verkhovna Rada to authorise it to stop paying its international debts.
And by post-haste, the bill was passed within hours.
It would apply to a list of bonds which are officially subject to Ukraine’s bid for $15bn in debt relief — which as we’ve noted before, includes the Russian bond maturing at the end of this year.
What makes this particularly interesting isn’t just the timing of the move to a moratorium, but also the rhetoric.
For those whose Ukrainian is rusty — some highlights from the statement:
1) The debt is referred to as an “issue of justice”;
2) Of the $17.5bn in IMF lending and $7bn in other official loans pledged to Ukraine, the government says it’s received $3bn this year — and paid $2.4bn on servicing its private hard-currency debt;
3) There’s a reference to debt borrowed by the previous government of Viktor Yanukovich as “wasted in vain” for the country; and…
4) “The government has the right… not to return loans borrowed by the Yanukovich kleptocratic regime”
The Russian bond was, meanwhile, one of the last financial acts of Yanukovich’s government.
This is all getting a whiff of the odious about it…
