Betreff: Resolution of Ukraine's debt crisis
Kiev Real Estate Recovery FundMacro News UpdateResolution of Ukraine's debt crisis
Bloomberg News: Finance Minister Natalie Jaresko reached an accord with a Franklin Templeton-led creditor committee that includes a 20 percent write-down to the face value of about $18 billion of Eurobonds, the first of which matures in less than a month. The agreement also pushes back redemption dates by four years and sets interest at 7.75 percent on all maturities, according to an e-mailed statement from the Finance Ministry. Russia is being offered the same terms as private bondholders. Bonds surged the most on record.Ukraine will temporarily suspend payments on that bond and a 600 million euro ($677 million) note due in October, the Finance Ministry said in today’s statement. The country has another $4 billion of payments scheduled by year’s end, including to Russia, which reiterated after the deal was announced that it won’t take part in the restructuring.This year the IMF has stepped in with a $17.5 billion bailout pledge, $3.4 billion of which Ukrainian officials say they expect to get in the next four months. The government has already received about $6.7 billion, helping the central bank almost double its reserves to $10.4 billion
Dragon Capital: The nominal haircut falls exactly in the middle between the sides’ initial offers (40% pushed for by Ukraine and 0% by the creditors’ committee) and is in line with both our base case scenario (0% to 20% haircut) and market expectations. Ukraine’s latest coupon payment also signals that talks are progressing. From the macro perspective, parameters of the deal are less important than the sides warding off the debt moratorium scenario, as the latter would have triggered domestic F/X market turbulence and dampen Ukraine’s economic recovery prospects.