Fixed Income
Quotes for Ukrainian sovereign Eurobonds saw some improvement last week amid intensified negotiating between the Ministry of Finance (MinFin) and the main creditors’ committee in San Francisco. However, by the end of the week, when it became apparent that no immediate deal would result from the talks, the situation looked muddled. On the one hand, some investors now hope for an improved offer from Kyiv, but the big stick of a debt redemption moratorium also looms in the background. Last week, financier George Soros stated his case in favor of debt relief for Ukraine. Symbolically, the way Soros characterized Franklin Templeton representative Nicholas Brady (a former head of the US Treasury Department) reminds us of the man in the Bible’s parable about the unjust borrower. We reiterate our expectation that Ukraine and the creditor group will ultimately agree on a principal writedown of between 15% and 25%, but at this point we also have to begin considering alternative scenarios in case
