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Ukraine Just Issued $1 Billion Bonds Backed By The US Taxpayer

Tyler Durden's picture


The bailout floodgates are open and the US taxpayer is footing the bill once again - whether through IMF loans or more directly. Today saw Ukraine issue $1 Billion 5-Year Notes at a stunningly low risk of only 28bps above US Treasuries and dramatically cheaper than the cost of capital in the public markets (and from the IMF) which yield over 10%. The reason for the 1) low cost, and 2) actual ability to raise debt... the bond is guaranteed by the US Agency for International Development and "assures full repayment of principal and interest" based on the full faith and credit of the US (Taxpayer). We assume Gazprom will be happy...


So why not pile into these bonds? 28 extra basis points for no apparent additional credit risk... some liquidity risk but we are sure your friendly local central bank will enable you to swap them for infinitely rehypothecatable cash with no haircut...

They're gonna need moar... (and this does not include Gazprom)


Oh and Ukraine says "thanks America"... (as WSJ reports)

"The $1 billion loan guarantee that (U.S. Agency for International Development) will implement will help the government of Ukraine access capital at reasonable rates and manage the transition to a prosperous democracy," Mark Feierstein, assistant administrator at USAID, said in April.


"The guarantee assures investors of full repayment of principal and interest."


The deal follows similar guarantees provided for bonds issued by Tunisia in 2012 and Jordan last year.

But - there is a catch...

Bank of America Merrill Lynch said Tuesday that Ukraine's bondholders could face losses if separatists in the country's southeastern regions successfully gain independence.


The bank said a breakup of the country could potentially force the International Monetary Fund to tear up Ukraine's current $17 billion aid package and trigger a debt restructuring program that would hit private investors. An IMF spokesperson said the fund is monitoring the situation.

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Wed, 05/14/2014 - 15:14 | 4760061 stinkhammer
stinkhammer's picture

i'm not interested in cock a maimy bond program   on the other hand Barry is interested in cock...

Wed, 05/14/2014 - 15:16 | 4760084 SAT 800
SAT 800's picture

Our Leaders !! How wonderful; we just got to countersign a loan for a bankrupt basket case of a fractured wanna-be country. Sieg Heil !!

Wed, 05/14/2014 - 15:17 | 4760088 SAT 800
SAT 800's picture

Is this what's called taxation without representation ?

Wed, 05/14/2014 - 15:21 | 4760112 icanhasbailout
icanhasbailout's picture

The catch is that they buyer of these bonds is probably one or more bailed-out US megabanks.

Wed, 05/14/2014 - 15:23 | 4760120 power steering
power steering's picture

So this is why they hired young Biden

Wed, 05/14/2014 - 15:30 | 4760159 rosiescenario
rosiescenario's picture

Wow...what an incredibly swift return on their investment.......it must almost be embarrassing to Joe.


Have any "reporters" actually presented this news to the public????

Wed, 05/14/2014 - 15:43 | 4760236 Mesquite
Mesquite's picture



Wed, 05/14/2014 - 16:01 | 4760311 crazzziecanuck
crazzziecanuck's picture

Let's review the score:



Ukraine 1 (billion dollars) ... Detroit 0 (cents)

Wed, 05/14/2014 - 16:37 | 4760398 strannick
strannick's picture

When you can create these digi-dollars for free, and at will, why do they have any yield?

What does it matter whether they are conjured into existence from the Fed's black magician hat in America, or in Ukraine?

Course under the blazing scrutiny of actual accounting, their value will melt away faster than Frosty.

Wed, 05/14/2014 - 16:50 | 4760460 flacon
flacon's picture

"Taxpayer" is a fucking misnomer. Nobody pays taxes anymore, not even those who do. The money is COMING FROM THE FEDERAL RESERVE POMO to the tune of $1bn - $3bn per day. 

Wed, 05/14/2014 - 17:05 | 4760555 Sashko89
Sashko89's picture

Anyone here ever heard of Novorossiya:)? 

Wed, 05/14/2014 - 17:38 | 4760678 0b1knob
0b1knob's picture

Backed by the full faith and credit of the US government.  Where have I heard that phrase before?

Oh yeh, Fannie Mae preferred.  So the suckers buying these bonds will be in line right after them....

Wed, 05/14/2014 - 17:46 | 4760699 espirit
espirit's picture

Pot's right.

$2.5B from IMF, and $1B from bonds.

Isn't that what Ukraine owes Gazprom on May 15th?

Wed, 05/14/2014 - 18:09 | 4760776 onthesquare
onthesquare's picture

It will be like a high divident trust fund.  for every dollar you invest you get a x% return as a dividend but your initial investment has declined by 2x%.  You end up, not only paying your own dividend, but paying the high management fees. 

The US Dollar won't buy shit in 5 years.

Wed, 05/14/2014 - 18:24 | 4760813 sushi
sushi's picture

The USSA has already spent $5 billion of your money to destabilze Ukraine in the first place.

What's another $1 billion just to light it up?



Also the article speaks of "Profitable Democracies." Please show me one democracy that is actually profitable. Most of the ones I know are in debt up tp their skull caps and would be unable to service that debt if rates return to thier nominal average.



Wed, 05/14/2014 - 15:32 | 4760172 y3maxx
y3maxx's picture

...Tlhe first step by the USSA in taking over Western Ukraine thru an eventual "Foreclosure from Debt"

Wed, 05/14/2014 - 16:42 | 4760449 Rainman
Rainman's picture

... that'd be way too clever for Barry to figure out.

Wed, 05/14/2014 - 18:46 | 4760889 QQQBall
QQQBall's picture

Its not Barry's plan... he is just an affable stooge

Wed, 05/14/2014 - 18:06 | 4760762 Canadian Dirtlump
Canadian Dirtlump's picture

I'm eagerly awaiting Biden to be videotaped washing his firebird bare belly commenting that Hunter's gonna make it rain in ukraine then give his usual smirk while goosing the reporter.



Wed, 05/14/2014 - 22:50 | 4761498 NickVegas
NickVegas's picture

The power of the dark side is strong in this young padwan.

Wed, 05/14/2014 - 15:30 | 4760160 Chief Wonder Bread
Chief Wonder Bread's picture

a Billion? it's a rounding error. Stupid USSA taxpayer won't notice.

Wed, 05/14/2014 - 16:02 | 4760316 crazzziecanuck
crazzziecanuck's picture

People in Detroit would love that rounding error right about now.

Wed, 05/14/2014 - 16:08 | 4760328 PontifexMaximus
PontifexMaximus's picture

But they won't get it!

Wed, 05/14/2014 - 16:24 | 4760376 crazzziecanuck
crazzziecanuck's picture

Pensioners making the city average of $19,000 per year are being asked to take a cut ... so the Ukraine can flush it down the toilet.

Professionalism is dead and all our institutions are failing.

Thu, 05/15/2014 - 00:55 | 4761666 EscapingProgress
EscapingProgress's picture

"...all our institutions are failing." You can only believe that if you believe that these institutions were set up to serve you. I would argue that they have been achieving wonderful success ... for the elites.

Wed, 05/14/2014 - 16:51 | 4760484 Urban Redneck
Urban Redneck's picture

If it's a rounding error , then why is Uncle Sam using a combination of accounting gimmicks (off balance sheet/contingent liabilities of a subsidiary) for the transaction?

Wed, 05/14/2014 - 17:49 | 4760625 Chief Wonder Bread
Chief Wonder Bread's picture

Uh, because they knew you were on the case?

Wed, 05/14/2014 - 18:06 | 4760765 Canadian Dirtlump
Canadian Dirtlump's picture

make the check payable to gazprom.



Wed, 05/14/2014 - 16:55 | 4760512 TheSecondLaw
TheSecondLaw's picture

Same as with US loans to developing countries for infrastructure.  The catch is contracts have to go to American contractors, not contractors in the debtor country.

Wed, 05/14/2014 - 15:22 | 4760113 pods
pods's picture

Why is it that wherever you see death and destruction you see the greedy little IMF fuckers floating around?

Bankers are worse than lawyers. 

Makes me sick to see this shit.  Foment war, who cares if someone had their face burned off.  Then stand back in that banana dress and feign support all the while knowing it was your money buying the mercenaries who were doing the killing.

This government has become a cancer on the planet.

Goddamn bankers.


Wed, 05/14/2014 - 15:27 | 4760135 power steering
power steering's picture

I agree with all except WTF is a "bananna dress" and how does it tie into Young Biden Jr??

Wed, 05/14/2014 - 15:33 | 4760178 pods
pods's picture

That soulless one from the State Dept took that selfie while in that God awful banana dress (Jen Psaki ).



Wed, 05/14/2014 - 15:35 | 4760193 power steering
power steering's picture

I miss so many interesting things while keeping tabs on the Turdashians

Wed, 05/14/2014 - 15:37 | 4760203 Bastiat
Bastiat's picture

A viral near-selfie of Psaki, the State Dept spokesclown.  http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2...

Wed, 05/14/2014 - 15:45 | 4760250 Nadine of Tyrol
Nadine of Tyrol's picture

Wait, isn't that dress racist?  Off with psaki's head!

Wed, 05/14/2014 - 16:26 | 4760387 Murf_DaSurf
Murf_DaSurf's picture




Off with her clothes! Bath her and then bring her to me....

Wed, 05/14/2014 - 15:49 | 4760269 power steering
power steering's picture

Ah Ha! The renowned Banana dress. Cute too!

Wed, 05/14/2014 - 16:07 | 4760322 crazzziecanuck
crazzziecanuck's picture

"My eyes!  They burn!  THEY BURN!"



Wed, 05/14/2014 - 16:22 | 4760370 vulcanraven
vulcanraven's picture

House of Tards

Wed, 05/14/2014 - 18:47 | 4760896 QQQBall
QQQBall's picture

Bonzai should change that sign to say "I like Black Men"

Wed, 05/14/2014 - 15:26 | 4760137 Dr. Engali
Dr. Engali's picture

Frustrating as hell to see them get away with this shit day in and day out.

Wed, 05/14/2014 - 15:47 | 4760258 Mesquite
Mesquite's picture

...this shit day in and day out...

and year in and year out..

and decade in and decade out...

and century in and century out...


Wed, 05/14/2014 - 15:27 | 4760141 Winston Churchill
Winston Churchill's picture

A lot of these bankers are lawyers, just like our 'representatives' in Sodom on the Potomac.
Was Bill Shakespeare right or what ?

Wed, 05/14/2014 - 17:06 | 4760559 kchrisc
kchrisc's picture

"Become a cancer"?!

Is, always has been.

Wed, 05/14/2014 - 15:29 | 4760145 Theta_Burn
Theta_Burn's picture


Not in this instance

Hunter Biden is our new representitive there, as not one Ukrainian could match his expertise


Wed, 05/14/2014 - 15:52 | 4760279 power steering
power steering's picture

Biden's other spawn were otherwise occupied

Wed, 05/14/2014 - 15:33 | 4760176 rosiescenario
rosiescenario's picture

....that is just another antiquated term....no longer of any concern....only a terrorist would bring it up....

Wed, 05/14/2014 - 15:34 | 4760191 BlindMonkey
BlindMonkey's picture

"Is this what's called taxation without representation ?"


Spending without a brain seems more like it.

Wed, 05/14/2014 - 15:18 | 4760092 Xibalba
Xibalba's picture

*thanks unborn grandkids for loan

Wed, 05/14/2014 - 15:23 | 4760118 The Most Intere...
The Most Interesting Frog in the World's picture

A quote from Putin no doubt as all funds will flow to him eventually....  

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