Ukraine "Crooks" Default On $3 Billion Bond To Putin

Tyler Durden's picture

Back in August, Ukraine struck a restructuring agreement on some $18 billion in Eurobonds with a group of creditors headed by Franklin Templeton. 

Under the terms of the deal, Kiev should save around $4 billion once everything is said and done. That was the good news. The bad news was that Ukraine still owed $3 billion to Vladimir Putin. Here’s what we said at the time:

“..owing Vladimir Putin $3 billion is not a situation one ever wants to find themselves in, but this particular case is exacerbated by the fact that Putin did not loan the money to Ukraine as we know it now, he loaned the money to a Ukraine that was governed by Russian-backed Viktor Yanukovych. Of course Yanukovych was run out of the country last year following a wave of protests (recall John McCain’s infamous speech at Maidan)." 

Ukrainian finance minister Natalie Jaresko offered the same restructuring terms to Russia that it offered to Franklin Templeton and T. Rowe. In effect, Jaresko was attempting to tell Vladimir Putin that Ukraine would allow him to take a 20% upfront loss on the $3 billion he loaned to Yanukovych who was overthrown by the current Ukrainian government with whom Moscow is effectively at war.

As you might imagine, Putin was not at all interested. Last month, Moscow "generously" offered to accept $1 billion per year from now until 2018 (so, a "restructuring" at par). Kiev refused, noting that such a deal would violate the country's agreement with its other creditors.

Earlier this week, the IMF ruled that the debt to Russia was intergovernmental (as opposed to private). “In the case of the Eurobond, the Russian authorities have represented that this claim is official. The information available regarding the history of the claim supports this representation,” the Fund said, in a statement.

"The decision means that under new IMF rules Ukraine will now have to demonstrate 'good faith' in at least attempting to negotiate a restructuring of its debt with Russia if it wants to secure the next instalment of a $17bn IMF-led rescue programme," FT noted at the time. "But the 'good faith' bar is one that senior IMF officials do not believe Ukraine has yet met."

That ruling effectively set the stage for Ukraine to declare a default and that's precisely what happened just moments ago. 

As Bloomberg reports, "Prime Minister Arseniy Yatsenyuk said Kiev is imposing a moratorium on the note due Dec. 20. Yatsenyuk announced the payment freeze at a government meeting in Kiev on Friday."The finance ministry warned Russia on Thursday evening that it could not make the payment (due by Sunday). 

"Considering that Russia has refused, despite our efforts, to sign an agreement on restructuring and to accept our proposals, the cabinet is imposing a moratorium on payment of the Russian debt worth $3 billion," Yatsenyuk said, adding that Kiev "is also imposing a moratorium on the $507 million debt payment to Russian banks of two Ukrainian companies Yuzhnoe and Ukravtodor. From today all payments are suspended till our government or a court makes a decision." 

And it looks like a court will have to make "a decision" because Putin is probably going to sue. "Russia said as recently as last week it would take Ukraine to court if the payment was missed," Bloomberg notes.

Earlier this month, Putin ordered Finance Minister Anton Siluanov to file a lawsuit against Ukraine in the event Kiev defaults. “It is strange. If they are so confident in the country’s solvency for the next year, then they could somehow participate during the last four years to share the risks," Putin said, referencing Washington's unwillingness to back Ukraine's guarantees. "Fine. File the lawsuit," he concluded.

So, the stage is now set for what will surely be an amusing court battle between Russia and Ukraine which, you're reminded, are still essentially at war. In a preview of the kind of chuckle-inducing soundbites you're likely to hear in the months ahead, we close with the following quote from PM Dmitry Medvedev:

“I have a feeling that they will not pay us back because they are crooks.”  

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Latina Lover's picture

"Of course they are crooks"

As  puppets of the USSA State Department, installed courtesy of a Color Revolution, their job is to harass Russia, even if it means committing national economic suicide.

What  else would you expect from a group selected "Fuck the EU" Nuland/Nudelman?

. . . _ _ _ . . .'s picture

USA didn't 'hold for safe-keeping' all of Ukraine's gold for nothing.

NoDebt's picture

Gonna be a cold winter in Ukraine with the gas turned off.

cossack55's picture

With the possible exception of random +1000 degree "accidents".

CuttingEdge's picture

Look on the positive side of the ledger.

$3bill is chump change when the USA gifts you Crimea (and Eastern Ukraine eventually).


Haus-Targaryen's picture

What does Russia do when the court says the $3 Billion is a good downpayment for Crimea? 
This kind of nonsense wouldn't surprise me.  

messystateofaffairs's picture

Advice to Putin, don't waste time with kangaroo courts dig it and more out of Ukraine with prepaid price increases.

the phantom's picture

Ukraine's time as a semi-functional state, has about 3 years.  Russia is already looking at several options, including additional Nord Stream capacity, that will completely take The Ukie's out of the gas picture completely.  Then what?  It becomes a Kosovo.  In the meantime, the oligarchs and political elite are stealing as much as possible... as that's what they do.

Jtrillian's picture

What good is the IMF if they allow some debts to be defaulted while requiring other debts to be paid? 

Answer:  The IMF is an organization of collusion.  If you are not one of the controlling countries, then FUHGET ABOUT IT. 

Eastern countries should abandon the IMF as well as the reserve currencies backing it in favor of precious metals  That will send a clear message and put them on better economic footing for the future.

Oracle 911's picture

Guys, the IMF said the Ukraine bonds are intergovernmental loans. It is just me or this stuff really stinks?

Because after this precedent the PIGS and the whole world can call gov. bonds emitted under the British or other law an intergovernmental or a private loan on which can be freely defaulted.


What do you think Tyler?

kralizec's picture

I think it is time to get out of Ukraine unless you like being Russia's bitch.


Macon Richardson's picture

The IMF declared the loan to be an "intergovernmental" loan. Parse the word "intergovernmental": it means "between governmenss". It is not a private loan. Intergovenmental loans are not private loans. The IMF gods have declared it a governmental loan which means, by exclusion that is is NOT a private loan.

Which part of this have you completely missed?

Oracle 911's picture

Well it was declared as intergubmit loan by IMF, BUT Russians bought it as Ukraine Euro-bond on the London exchange. So it smells.

lasvegaspersona's picture

The Euro has already done this. More than half of the ECB reserves (in dollar terms) are gold. It is marked to market so the 'value' varies but it is unique and some think an excellent way to use gold.

BlindMonkey's picture

"What does Russia do when the court says the $3 Billion is a good downpayment for Crimea? "


It is hard to imagine Russia losing that in court.   If you have a coup, all bets are off.

golden kafir's picture

"What does Russia do when the court says the $3 Billion is a good downpayment for Crimea? " except Crimea was an Autonomous Republic filled with russians. Also historically the Dnieper river was a dividing line between cultures and more or less belonged to the Zaporozhian Cossacks for hundreds of years. East of the Dnieper the ottoman tatars dominated, so there really is no historical precedent for Ukraine to have any claims to any territories east of the Dnieper. The cossacks are the ones with a valid claim but are being forced by novorusian rebels to reject aspirations for political independence under threat of assassination.

Bernoulli's picture

Careful, Vlad! Watch your back!
President Obama is toughening up in the wilderness, eating salmon that was leftover from a bear (!)

CuttingEdge's picture

Make a change from Wookie leftovers then.

X_Weatherman's picture

I didn't know Bear was THAT way.

swmnguy's picture

We know he drinks his own pee, when there's a full camera and sound crew standing right there (and you know they've got water, coffee, juices, bagels, snacks, etc.).

Lorca's Novena's picture

Bull sheet... All that amounted to was a small hike with 25 glocks and a few AR's.... Lets se that Bitch spend just one weekend alone in the Sierras. The bears would assume he was queer and butt devastate the potus.

Tigermoth's picture

But Obumer has a coat on! Vald would be in shorts only in that weather.

Alan_F's picture

What weather? That runoff wasn't global warming but the out of shot propane heaters.

dogbreath's picture

Thats gotta be his stunt double

Pumpkin's picture

You would think this might be a consideration.

Volkodav's picture

not if you live in mansion taking from others

otherwise, average Ukrainian citizen has no say of what happens

Ukraine has never been a sovereign country

now is hardly a country

failed state

Gavrikon's picture

Of COURSE they're crooks!

But they're OUR crooks!

my_nym's picture

That's the problem.  They aren't.   They're Jews. Unless you think that our fortunes have been so incorporated with the criminal religion that creates international, tribal mafias... I guess.  Hopium/opium.  Who owned the monopoly on trading that to the "goy"?  Slave trade, who owned the slave ships?  The international debt/money trade of banking, who owns that? 

They're our crooks?  Americans should take another look at the original "revolution" led by the Masonic/patrician class against their own overlords in the international trade.  No sooner had they got done then a Jewish agent tried to set up a way to get incorporated in the international debt/money trade again and there was a Whiskey Rebellion based on their own "revolution."  Washington probably felt pretty sheepish getting on his horse and leading men to put down a rebelion.

This struggle goes way back.  And Judaizers/Masons are usually on the wrong side of it, even if they get idolized and have their little Talmudism lite clubs for the "dumb goyim."  Washington was a very good guy in many ways but I'm with the Whiskey Rebellion guys and other forms of resistance that have arisen throughout history.       

Consuelo's picture

It was his henchman, Hamilton actually, who led the charge on the Whiskey Rebellion.

my_nym's picture

Strange that the Jews surrounding Putin can't find a way of dealing with the Jewish proxy government of the Ukraine and the Jewish government in America. 

No matter, apparently it's mainly the "goy" that pay when Jews disagree with each other or can't quite "advise" or manipulate political leaders like Putin/Trump.  Leaders/patriarchs that are coming into alignment, naturally... because half the shit that's being done around the world is based on Judeo/Zionism/globalism/banksterism without regard for the interests of American or Russian people.  (Not that there's an "American" or "Russian" national identity anymore anyway.  These guys are empire builders and all "Americans" are slated to be totally monetized, blended and melted out of existence based on immigration.  If Russia was a more successful empire, same deal.   

I guess that's Trump's main argument:  "You're not even going to have an empire in the future.  Make America White, I Mean Great Again!  What are the ethnic spines that the Russian and American empires rest on? How far can they expand or project power without the work becoming "back breaking"?  We probably have diversity programs at the CIA at this point.  So those guys could be Muslims.  Or they could be African pygmies. Or perhaps Somalian immigrants?  These guys better take note of the ethno/racial spines that empires are built on if they expect to continue having an "international"/interracial empire. 


Personally, it makes no difference to me at this point.    

Infinite QE's picture

We are the elders. We pay nothing back.

- The Elders of Zion, Ukraine Office

JustObserving's picture

 they will not pay us back because they are crooks.

But they are crooks controlled by US/NATO. CIA sock-puppets.  And war criminals too

juicy_bananas's picture

Coffee's for closers.

NoDebt's picture

That $3B will be put to better use in the war effort.

- What's Left of Ukraine's Puppet Government

Cognitive Dissonance's picture

Name me one non crooked/corrupt regime the USA has (newly) supported over the last 20 years.

NoDebt's picture

How do you buy off non-corrupt people to do your bidding?  Its sort of a contradiction in terms.

Cognitive Dissonance's picture

So the only regimes we wish to support are those who work against the will of their own people, thus the need to 'buy them off'? What does that make the USA?

<America the corrupt.>

BullyBearish's picture

Read this:

The Confessions of an Economic Hit Man

WillyGroper's picture

I think Perkins got Qadaffy wrong.

Free college, house, $50K to start a fambly & highest standard of living in Africa.

We've destroyed the place.

Not to mention MSM coverage at the dinner hour of his knife buggaring.

Bay of Pigs's picture

What would you except from a pyschopath, hypocrite and war criminal. She is evil personified.

WillyGroper's picture

The reference was to Perkins, not cankles.

Vendetta's picture

"What does that make the USA?"   3rd Reich reincarnated through finance/trade policy then ultimately military action?

swmnguy's picture

That's what all Empires do.  Anybody they can't corrupt, they try to destroy.  There's nothing new about this.  Except that, until about 12 years ago, we pretended we weren't an Empire and it was in very bad taste to say differently.

Maestro Maestro's picture



You're a joke.


You're selling Russia's oil for your enemy's fraudulent dollars thereby keeping America going, so that they can kick your ass time and time again.


You're selling valuable Russian gas for the Europeans' only-dollar-backed, banker-and-NOT-sovereign-nation-printed Euros, in effect giving the gas away for free to the Americans' vassals and collaborators, the Europeans.


Lastly, you're supplying gas to the Ukrainians who burned dozens of Russians alive, and killed thousands more of your Russian people?


And now you're going to sue them?  For dollars or Euros which the American and European bankers can confiscate or devalue to oblivion with a few strokes on a computer keyboard?


You're like a whore who wants his virginity back.

cowdiddly's picture

No, Putin only excepts oil payments in Rubles starting early this year. Why do you think they hate him so much? And secondly, He is only selling gas to the Ukraine on a prepayment basis as they have stiffed him too many times. Your buddies at the EU have been making the payments for them. So that makes the EU leaders the whores, using soveriegn tax dollars to keep another nation of deadbeats warm.

He did this because they attack the Ruble and Sherbank with financial terrorism much like what they do on a daily basis to the gold and silver markets. These stories and proof ar just coming out but it was obvious months ago. This only hurts if your oil sales are in dollars. Now he has super cheap Rubles and the number one exporter of oil getting paid in devalued money. HE IS LOVING IT. The stupid idiots can't even figure out exporting nations love a cheap currency. when they get paid in their own money. WHy do you think the Chinese are devaluing Yuan by 15% as soon as they join the IMF SDR fund and became part of the reserve currency basket? THEY export buttloads and will make out like fat rats.

That and they siphon and steal all they can from the Ukraine pipeline gas heading to Europe, which is why Russia is trying to lay an alternative route through Hungary or Turkey or Nordstream 2.

AND, what do the Eurpean goons do? Why they try to block every alternative pipeline project to deliver their own gas to them. If I was Putin I would tell them to fuckin freeze then you European maggots. Either you want the gas or not. Never have I seen a group of nations as the European Union so intent on destroying theirselves as the EU is, be it immigration, gas, sanctions or other.

The whores reside in Europe in this case. Keep up or shut up

cossack55's picture

ZH should institute a "super-up" arrow for those comments that are totally on the mark.

tsuki's picture

There was no problem with the second Nord Stream.  The Nords, esp. Germany, want the revenue.  Nothing for the Suds or Osts.