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Russia Refuses To Participate In Ukraine Debt Restructuring
War-torn Ukraine has reportedly reached a restructuring deal with a group of creditors headed by Franklin Templeton, according to the country’s finance minister Natalie Jaresko. The terms of the agreement call for a 20% writedown and a reprofiling that includes a maturity extension of four years and an across-the-board 7.75% coupon.
President Petro Poroshenko hopes the restructuring deal will save the country billions on the way to helping Kiev adhere to the terms of its subsidized Gazprom payments IMF bailout. Here’s more from Bloomberg:
The 49-year-old Ukrainian leader, elected last year after becoming a billionaire in the chocolate business, was racing to reach a comprehensive accord with creditors before a $500 million bond comes due next month. 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 a further $4 billion of payments scheduled by year’s end.
A final agreement requires the approval of 75 percent of bondholders of each note at a meeting in which at least two-thirds of them are represented. Ukraine’s debt contains cross-default clauses that mean missing a payment on one results in default on all. The government earlier threatened to declare a debt moratorium to push negotiations along.
Franklin Templeton, which owns about $7 billion of Ukrainian bonds, were joined in the talks by fellow creditors BTG Pactual Europe LLP, TCW Investment Management Co. and T. Rowe Price Associates Inc.
One person who will not be accepting the new terms is newly-minted bond vulture Vladimir Putin who, back in March, threatened to undermine negotiations with other creditors by holding out on some $3 billion in 2-year notes Moscow bought back in 2013 to help out then-President Viktor Yanukovych. "Russia won’t participate in Ukraine’s debt restructuring," Finance Minister Anton Siluanov told Bloomberg by telephone.
Jaresko said she's "offering Russia a restructuring opportunity that is the same as everyone else’s" which she figures is "the best way to depoliticize" the issue and "for us to all move forward together." That, apparently, is not in the cards, but there is still a distinct possibility that everyone will move backward together. Just ask Poroshenko who told a crowd on Monday at a ceremony in central Kiev to mark 24 years of Ukrainian independence from Moscow that "we have to get through the (coming) 25th year of independence as if on brittle ice. We must understand that the smallest misstep could be fatal. The war for Ukrainian independence is continuing."
And then there's this, via Reuters:
Seven Ukrainian servicemen have been killed and 13 wounded in fighting with pro-Russian separatists in the past 24 hours, military spokesman Oleksander Motuzyanyk said on Thursday.
The casualties were the highest daily losses for the Ukrainian army since mid-July, as violence continues to test a six-month-old ceasefire deal.
Meanwhile, Ukraine's central bank took the country 300 bps "closer" to ZIRP, slashing rates 300bps to only 27% citing, amusingly, "a fall in inflationary risks."
Needless to say, the situation in Ukraine is a very, very long way from stabilizing and as we've detailed extensively of late, there's a non-zero possibility that one or more of the country's unofficial militias (whose leaders have been the subject of not-so-flattering comparisons to a certain fascist political movement that attempted to take over the world in 1939) will attempt a military coup even as the separatists push for autonomy.
Summed up in one picture...
* * *
Here's Goldman's take
Main points:
1. Finance Minister Jaresko, in a special government session called today, announced that Ukraine has reached agreement with the ad hoc creditor committee on a bond restructuring deal. This deal includes a 20% nominal haircut, a coupon of 7.75% (up from 7.25% previously) and a maturity extension of 4 years for each bond. It also includes GDP warrants that pay out over the period 2021-40 if growth exceeds 3%, subject to nominal GDP exceeding US$125.4bn (the IMF's projection for 2019 GDP). Minister Jaresko argues that these deal parameters are consistent with the IMF's three objectives for the debt operation.
2. While the 20% nominal haircut was reported in the press last week, in our view the coupon increase to 7.75% and the 4-year maturity extension are likely more favourable than market expectations for a lower coupon and longer extension.
3. In order for the restructuring to take place, bondholders will have to approve the exchange offer on a bond-by-bond basis with a sufficient majority and subject to a minimum quorum. In our view, given the attractiveness of the offer relative to market expectations, the risk of a holdout scenario is relatively low.
4. Based on our estimates, the deal parameters imply average bond prices across the curve of 57 cents at a 14% exit yield, 63 cents at a 12% exit yield and 70 cents at a 10% exit yield. Our base case remains for a 14% exit yield, based on our estimated fair value as a function of Ukraine's macro fundamentals and also consistent with past episodes of restructuring. These estimates assume zero value for the GDP warrants, likely a conservative assumption.
5. In addition, given that the same parameters apply to all bonds on the curve, this deal favours lower-coupon bonds over higher-coupon ones. The relatively shorter maturity extension than expected, in our view, favours the front end over the long end of the curve. Based on our estimates, at a 14% exit yield, the premium for the shortest-maturity (2015) bond over the longer-maturity (2023) bond should stand at 12 points. At a 12% exit yield, it should be 10 points, and at a 10% exit yield, 5 points.
6. Russia has said that it will not participate in the bond exchange. Minister Jaresko has reiterated that Ukraine will not treat Russia differently from other creditors. Thus, how Ukraine and the IMF (which likely views the Russian-owned bond as official debt) will address the issue of this bond maturing in December remains an open issue and should, ceteris paribus, require a higher exit yield.
7. While the terms of the debt restructuring will likely satisfy the IMF's criteria, in our view, the question of the sustainability of Ukraine's debt remains open. As we have argued previously, this will likely hinge on the willingness and ability of the Ukrainian authorities to follow through on structural and governance reforms and on developments in the conflict in Eastern Ukraine. Relative to the IMF's forecasts, our macroeconomic outlook for Ukraine is considerably weaker in the medium term, with trend growth of around 2% during the structural adjustment and the Hryvnia weakening in our projections to UAH 30 vs. the USD. In our view, under this scenario, questions of debt sustainability may well resurface in the coming years. Uncertainty about the outlook as well as the geopolitical conflict, in our view, is an additional reason why we argue for a higher exit yield of 14% than consensus market expectations (which we estimate stand at around 12%).
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Will someone just start shooting alread!?
I don't understand what's wrong with wars of conquest. The UN wants to pretend that borders will never change again. That namby-pamby nonsense is causing a severe stagnation.
I support the recognition of a nation’s ability to claim and defend territory within its means. If Britain claims, say, the entirety of Patagonia, if they can take and hold it militarily, then Patagonia would be British.
“Historic” claims are of little consequence to anyone. The American southwest used to be Mexico, for example, but we beat the snot out of Mexico and took it. Now it is American. Mexico no longer has a valid claim on that land, as their claim was ended when the US beat them. They also could not make a new claim on the land today, as they could not take it or hold it.
Aquitaine and Normandy were once English. They are no more. Thus, Britain has no claim on them unless they were able to, in wartime, beat France and restore control.
For the most modern example, Russia willingly gave up its claim to Crimea when it transferred it to Ukraine in… what was it, the 1960s? Crimea was Ukrainian. However, Russia successfully reclaimed Crimea last year, and thus Crimea is Russian again.
Spoken like the rantings of a lunatic unfortunately that should be in a padded cell (but is not) that works for either Bob Kagan or Benji Netanyahu!
Hey, thanks for the refutation or anything other than ad-homs.
Oh, wait.
No Smallest Skil
You forgot what happens when you try to start a war with another military superpower on it's own border.
If you don't believe me just as these kids aboard this boat that got shall we say just a wee too close and wrote a letter about it!
Shape of things that come to those who are criminally not right in the skull! Especially with the weapons that are around today that you didn't speak to in your "rant"...
My advice? Be careful what you wish for!!!
Please, that article is complete bullshit.
I am pretty sympathetic to the Russian/Crimean thing, but the sheer amount of energy needed to overcome Donald Cook's defenses would have cooked the pilot alive.
Fun story, but complete bullshit.
(BTW -- if the crew had "resigned" they would have all been charged with desertion)
Throughout the US/F-U-EU Nuland coup travesty and Donbass rebellion, Russia has remained Ukraine’s biggest trading partner (24% export, 31% import).
Some things like airplanes and parts, Russia needs.
How much do you want to bet that Russia has been working on facilities to eliminate the need to trade with Ukraine at all?
https://atlas.media.mit.edu/en/profile/country/ukr/
Officers can resign.
Enlisted men have channels to try to get out because of various hardships etc.
Fun story, but complete bullshit.
No H-T it ain't bullshit...
Tell me when is the last time the U.S. has broken the Montreux Agreement since that incident took place in either the Baltic or Black Sea?
The Russians turned on one of their mobile Bastion complexes on Crimea which illuminated the Donald Cook. They then let an unarmed Sukhoi buzz the Cook multiple times - effectively saying "Come on, Big Boy, show us what you got! Nothin!". The Donald high tailed it out of the way.
http://www.rt.com/news/186456-russia-black-sea-bastion/
What happens to Franklin Templeton if Ukraine suspends indefinitely payment on its bonds? Does Franklin Templeton have CDS insurance or similar type insurance on its $7 billion worth of Ukranian bonds? Most importantly, if Franklin Templeton has to write off these bonds, to save money, will it discontinue its annoying TV ads?
I GAVE UP TV 8 YEARS ago.. the boob tube
Yeah everyone here's a quick history lesson
Back in was Soviet Union Ukraine was part of Russia, and even today around 40+% of population of Ukraine are Russians while "Ukrainians" barely take the majority with 50+%
Why are they fighting? because puppets(guv.) love its masters(USA USA)
Why shouldn't they fight? Because Ukraine basically live off of Russia conducting most of its trades with Russia especially right after the Fall of Soviet Union it is a known fact that not only Ukraine steals natural gas from Russia-built gas pipes but also out-right refuses to pay for usage
The borders representing both countries today are dubious and an unrealistic representation of its people due to the said above
What Ukraine SHOULD do is pay Russia back its money, THEN talk about segregation. Just sayin.
I agree with you completely. For better or worse -- this is the way it has been for -- well ever, and if we as humanity think we can put away our nature and thousands of years of history because of the UN -- you're fooling yourself.
Well said.
Atta boy, speaking power to truth...
I hope you're aware that what you wrote above sides you with Israhell on the Palestinian issue.
Krushchev was a Ukrainian national
decision was basically for administrative purposes..
no one expected Ukraine split off in future
Since Ukraine independent, Crimeans attempted vote rights, but shut down by Kiev
No one asked Crimeans
Finally they did themselves
Seceded held secure with local militia asked to join
That land is counted as collateral on the bonds (debt) that those countries barrow against so it matters to the Banksters to make debt issuance appear legit on paper.
thats a recipe for permanent war.
WW1 and WW2, as Napoleon's war before that, taught us that "national" was the new pest of EUrope since French Revolution.
Europe was destroyed because of it in 1945. in national fascism.
It began again when Berlin wall collapsed and Milosovic tried to carve up Tito's federation to his advantage using ethnic cleasing.
To believe that nation state wars are justfied you have to be nuts today. Or a man who makes money out of selling death by millions and gets some power out of it.
Militarist Nationalism = age of the psycopath. Thats now proven in history.
The developed world's population wants a world without frontiers and without psychopaths.
But...Empires and evils ones still run th world!
The developed world's population wants a world? LOL!
The developed world's population wants absolute world domination. And many slaves in their colonies around the world.
+1000 absolutely correct, borders are just tint marks on a piece of paper unless you have an Army to defend them
Wow, great material to spread around :)
UN Basic Principles states: Users define its borders, borders do not define its people.
OK, well then . . .
how about a 50% discount on gas this winter???
(we won't pay anyway!)
Won't happen.
Russia is playing nice guy on energy for Ukraine as long as Russia remains dependent on Ukrainian cooperation to provide a sufficient electricity supply to Crimea.
That depency ends in December 2015 when a first (of several) new electricity transmission cables across the Kerch strait comes into operation.
The people of Crimea would rather have the lights out than be part of the Ukraine again.
That was true last year. Not so much now.
"That was true last year. Not so much now."
You mean, now that the Ukraine economic situation has got so much better, the Crimeans are sorry for what they've lost by leaving it behind?
Puh-Leeze.
Tjeff1 - please explain.
Oh really? They pay 17 percent flat tax Russian rate, while the Kiev pays 50 percent or more.
Pensioners in Crimea get double what the Kiev' goons get.
Oh really? They pay 17 percent flat tax Russian rate, while the Kiev pays 50 percent or more.
Pensioners in Crimea get double what the Kiev' goons get.
I suggest you watch some on the ground interviews of people there.
Like this one? Crimea for Dummies documentary made by an American
https://www.youtube.com/watch?v=W1zvb_ottiw
Like this one? Crimea for Dummies documentary made by an American
https://www.youtube.com/watch?v=W1zvb_ottiw
Rita Katz is booked solid.
This is financial warfare -
But my question is No One bats,an eye at the major haircut the USA and eurotrash banksters want for the damn NAZIS in Ukraine for their debt but it's a big Hell No on any haircut for an actual democracy called Greece.
Fascist bastards run the western show.
This is financial warfare -
But my question is No One bats,an eye at the major haircut the USA and eurotrash banksters want for the damn NAZIS in Ukraine for their debt but it's a big Hell No on any haircut for an actual democracy called Greece.
Fascist bastards run the western show.
Why would he be interested?
Especially when the EU is raping Greece, Ireland, Portugal and soon to be Spain and Italy denying them through "enhanced austerity techniques" while they keep filling up Ukraine with goodies in a vain attempt for war with his Country!
I know Putin's not a nice guy, but I just love to watch him work. Bureaucrats spend months on some fakakta deal, he walks in, has a look and says "Mmm... nah. I'll take a pass on that."
Why isn't he a nice guy?
Because he doesn't say 'pretty please' to the Anglo-Zionists or Russia's oligarchs?
Nice guys finish last
nice guys get fucked in the ass.
The fifth “NO” from the Orthodox people to the AngloZionist Empire
http://thesaker.is/the-fifth-no-from-the-orthodox-people-to-the-anglozio...
Shootin' still going on and these people want to talk about a sweetheart deal on overdue bills with the people they are shootin' at?
Didn't the US and EU initiate another round of asset confiscations and travel bans just a few months ago?
Aren't there still international sanctions and a reciprocated embargo on foodstuffs, etc..?
Did The Candyman even send a box of sweets with the proposal?
Putin is not nice, he is a Bad-Ass
of course they are refusing.
if you're trying to burn my house down, I'm not going to give you any matches.
I was gonna say 'gas' but... you know...
Good for Putin.
Also this just in...Two BBC reporters were filming the crash of the suspected shooter from yesterday. They Virginia police forced them to delete their footage and they tweeted about it questioning the motives of police for wanting to destroy possible evidence.
http://www.infowars.com/virginia-police-order-bbc-journalists-to-delete-footage-of-suspected-shooters-crash/
Putin with a rather large middle finger
Petro Poroshenko aka Valtzman is a not just a dual shit-i-Zen but has three passports.
How many innocent Ukrainains and conscripts did Porky and Nudelman kill today?
Poroshenko - it's a zero without a stick, a talking head - puppet. Without orders from Washington, Poroshenko has no right even to fart very silently!
26.08.2015 Military Report of Novorossia
http://thesaker.is/26-08-2015-military-report-of-novorossia/
The Russian army is beginning to engage in Syria
http://www.voltairenet.org/article188522.html
Interesting information there.
The men of NovoRussia as well as the Syrian army protecting their people are heroes. The whole situation in Syria and the Ukraine is sickening.
What's he supposed to do? Say that he loves Poroshenko and invite him over to play grab ass?
Americans live in a propaganda bubble in which the US, UK, and Israel - who collectively have killed more people by orders of magnitude than all "Muslim terrorists" {legit or proxy-golem} for years.
What they have in common is megalomania and always claiming to be "defending" something - democracy, trade, whatever.
But outside this bubble, it is patently obvious. "The Grand Chessboard" merged with The Oded Yinon Plan.
This is of course a simple, even simplistic way to explain it - but it gets the job done.
some people think all the illegal immigration is about driving down wages, or Democratic votes {as if G Bush tried to control the border}
I think its about the need for future cannon fodder.
illegal immigration is about breaking any pockets of resistance to the New World Order
I don't disagree.
Certainly the case in Europe although the cannon fodder argument may also apply.
Again there you have the dovetailing {for now} of Jewish Supremacist {'Zionist'} interests - think Barbara Specter who went from the US to Israel, then inexplicably to Sweden to foster immigration, or think Alan Shatter in Ireland...
with a broader, probably largely banker-driven plan for global government.
I think any people has a right to remain a people.
Even Europeans - particularly those Europeans, like the Irish and Scottish, who were victims of colonization and oppression themselves.
The English and French... meh, its not unreasonable to say that they raped the 3rd world and should take immigrants from their former colonies.
But what's going on is a deliberate, clearly deliberate effort - disproportionately cheerlead by Jews, but not at all exclusively and it wouldnt be happening if it were just {some of} them.
Who knows, in the longer run it might end up being a good thing if the resulting mix of people's wake up.
But for that to happen, the money system needs to be overthrown, and the domination of media and governments by a tiny elite.
I believe its in the Tribes interest to dilute the native or majorities of all nations so that no one can act in a nationalistic sense. Have you ever noticed how any form of Nationalism is quickly associated with Nazism when nothing more than national pride or ethnic/racial/religious unity is displayed? Just because you think your nation is the best and you enjoy the company of people that are like you in their beliefs and culture doesn't mean you want all others to cease to exist or oppress them.
According to 1980s Israeli biological weapons research, jewish DNA is no different from eastern european stock. The tribe is just a suicidal political instrument, nothing more.
Putin needs to come out with a gold backed currency already, plunge a stake into the heart of the squid
The bankers are out to kill you Vlad
They got the Czar how long after Russia backed American independence against the British bankers?
Russia would go bankrupt overnight if Putin did this.
Check the amount of gold they hold, their debt and needed daily cash flow, it is not possible.
They had difficulties when oil was at $100 and are getting crushed now which in turn has devalued the Ruble exacerbating the problem.
The Ruble is at 66.40 today, this time last year it was 35; what inflation?
When it is life or death you do what you must
Doesn't have to be a 100% gold Ruble, start at 10%, anything
“willingness and ability of the Ukrainian authorities to follow through on structural and governance reforms”- read more austerity, further cuts to pensions, higher unemployment and inflation. This looks a prescription for continuing economic decline and increasing social unrest.
“questions of debt sustainability may well resurface”- read Ukraine is an economic basket that in the past has been supported by Russia (loans at very favorable terms and subsidized energy). The post-coup Ukrainian “government” wants closer relations with (a bankrupt) EU and has repeatedly stated that they are “at war” with Russia. At the same time, they apparently expect Russia to continue subsidizing their economy. Unfortunately, Ukraine ceased being a country, following the 2014 coup, engineered by (“F*** the EU”) Victoria Nuland.
since USSR split and Kiev runs economics, Russian Federation has subsidized Ukraine
230B USD equivalent.
That does not include gas stealings of billions moved outside country...
Now is worse than ever, real Ukrainians have even less control over their daily lives.
Ukraine has never been a Sovereign Nation.
"... engineered by (“F*** the EU”) Victoria Nuland."
I think you are giving her too much credit.
Of course he is not interested it was George Sores and the US clowns in DC who destroyed Ukraine. Mayvbe if we return there 46 tons of Gold he will help? Not a chance!
Did GREECE get a nice restructuring deal?
NO?
Well, then...
Really???
100 bn € write off, 1% interest rate and 50 year maturity!
Poor Greeks
Being forced to cede profitable infrastructure to certain consortia without open auctions will end up costing Greece more than what was given.
The debt cannot ever be repaid and it should never have been extended in the first place.
When people make stupid loans that can't possibly be repaid they deserve to loose their money...
Well then, why they don't simplly leave the euroarea?? They had an OXI referrendum! What are they waiiting for??
Did the NYC (FED influenced) court make the hedge fund managers go along with the majority in the Argentinian debt re-structuring?
Just wait till oil goes up in price again and Russia can afford to cut off the natural gas to Europe...
And what exactly will they do with their gas?? Drink it??
Russia is lucky to have a customer like the EU, which has newer missed a payment.
BTW, that China gas deal doesn't look so awesone now, does it??
And poor Gazprom! Worth only 60b $!
Putin team did a nice job, robbing Gazprom and sending all that money to Swiss!
Putin doesn't care about selling gas to Europe, he wants to OWN Europe. Gazprom is simply a means to an end.
Putin is playing chess with little kids who haven't even figured out the basics of hop-scotch and jacks.
Owe Europe?? With what???
Russia is sinking like Titanic (-4.6% GDP in Q2, 15% inflation, soaring unemployment, rubble lost 50% agains USD in 1 year, 65 year life expectancy,....)
Putin, the master chess player!!
Well, let's see about how "reasonable" the Russians should be:
And now the banksters want the Russians to "cooperate" in taking a haircut on Ukrainian loans. Is it any wonder there is a big ol' horse laugh coming out of Moscow?
"Jaresko said she's "offering Russia a restructuring opportunity"
What a nice lady! How could Russia say no?
Ukraine: how about you reduce all our debts by 50% and give us a 50% discount on your Gas AND allow us to charge you for transit 150% AND we keep killing your Russian Borthers in the East in exchange for NOTHING, does that not sound like a great deal to you?
Putin: ???
Movin movin movin. Keep dem banksters squirmin
Putin.
Head em up. Head em out.
Ride em in Ride em out.
Putin
CALPERS gonna take a big hit on it's Ukraine looter investments
WTF is code pink? Silent on public teachers funding resource theft wars killing civilians?
cant type spam killin it
Odds are pretty good Ukraine bonds issued by the Coup regime will be negotiable in conferderate currency (same bankers BTW)
Keeping fingers crossed
Hoping that WW3 doesn't start out
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Those (euroPeons) who gave noble peace prize to cabalA$$LickerHomObamma are now going to give verdict on the incident, the verdict is this :
"Russia is responsible for shooting down the plane and President Putin is a threat to humanity, he needs to be brought to ICC & held captive for the duration of trial (just like African presidents) and also his ministers and military personal"
West wants a regime change in Russia desperately , and this is the opportunity.
We know what all you (whiite) euroPeons do.
But remember this time this is not African or Asian head of state.
Fcuk the EU - this is the guiding principle of the puppetmasters however what good are the puppetmasters
If they first burn with radiation and then also in hell