UKRAINE has secured a deal with its creditors on $18 billion-worth of external debt. The creditors, represented by a number of big financial firms, agreed to a 20% write-off of the principal. One bond included in the discussions is $3 billion that Ukraine owes to Russia. For those who have not kept up with Ukraine’s debt negotiations, here is a quick refresher.
Russia lent Ukraine $3 billion in December 2013. The bond was arranged by Western law firms (including White & Case and Clifford Chance) and is listed on the Irish stock exchange. The bond was essentially a bribe to Viktor Yanukovych, Ukraine’s now-ousted president, who was dithering between European and Eurasian integration. Senior Ukrainian officials say that the government itself never saw the money; most probably it was spirited out of the country by Mr Yanukoyvch’s cronies.
Since its issue, the bond has caused Ukraine big problems. A bizarre clause in the bond says that if Ukraine’s debt-to-GDP ratio exceeds...Continue reading
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