With Ukraine Default Risk At 6 Year Highs, US Taxpayers "Volunteer" To Guarantee Its Debt

Just two days ago we detailed the possibility that Russia could accelerate debt repayment on a $3 billion loan it granted to Ukraine that has broken its covenants. While there is no word yet from Russia on a decision whether to demand the payment, it appears, as Reuters reports, the US taxpayer - just as we warned - is quite willing to step up (thanks to their leaders in Washington) and guarantee $2 billion in loans to the world's 2nd most credit risky nation (after Venezuela).


Ukraine is the 2nd most risky sovereign nation in the world (beaten only by socialist utopia Venezuela) based on CDS premia...


As Reuters reports, The US Treasury seems more than happy to put $2 billion of US taxpayer money at risk...

The United States plans to provide up to $2 billion in loan guarantees to Ukraine this year, the U.S. Treasury said on Tuesday, as part of a broader international package to stave off bankruptcy.


Like other major donors to the country, Treasury said the guarantees would be contingent on the former Soviet republic remaining on track to meet the conditions of its loan program from the International Monetary Fund.


Treasury said it would provide a $1 billion loan guarantee to Kiev in the first half of this year, and work with the U.S. Congress to provide an additional $1 billion guarantee, but only if Kiev sticks with its reform agenda.

So where does the nation stand?

The cost of insuring exposure to Ukrainian debt rose to a new 5-1/2 year high on Tuesday, according to data from Markit, a financial information provider, amid fears the country may have to restructure its debt.



Ukraine's foreign currency reserves were down to just over $7.5 billion at the start of the year, the lowest in 10 years and barely enough to cover five weeks of imports.

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How ironic it is that, should Russia decide to demand early repayment (not a controversial decision), then - despite all the sanctions and economic warfare - it would be the US taxpayer's cash that 'bails' them out indirectly...

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But that's not all: