/Pogled.info/ International organizations lowered Ukraine’s credit rating almost to bankruptcy. The projections are disappointing: Western creditors have to seriously prepare to be left empty So far, Kiev has agreed to restructure part of the debt. However, this is only considered to be a temporary revocation pending the determination of total inability to pay the bills.
Limited bankruptcy
Standard & Poor’s downgraded Ukraine’s long-term and short-term credit ratings from near default (SS) to selective default (SD) on August 1.
Then another Big Three agency, Fitch, did the same with its long-term issuer rating. The ten-day grace period to redeem the $750 million coupon has expired and the money has not arrived, the agency said.
“This is a bankruptcy under Fitch’s criteria,” the press release said.
Borrowing is not possible
Further market loans on the capital market is almost impossible for Kiev.
“The breach of the securities has already ceased to be technical, this led to a decrease in the rating not only of the issue itself, but also of its issuer,” explained Oleg Skapenker, professor of -affiliated in the Department of Financial Markets and Global Technologies from RIU “Plekhanov”.
And even in the “junk” debt category, Ukraine has nothing to trust, adds Andrey Kochetkov, a private investment consultant.
However, Kiev received from the committee of holders of Eurobonds the restructuring of the external public commercial debt.
This will save $11.4 billion in loan servicing costs over the next three years. By 2033, it will be 22.75 billion. Resources will be released that can be spent on defense and social spending, noted the Minister of Finance of Ukraine Serhiy Marchenko.
And on July 18, the Verkhovna Rada approved a law that allows the government to suspend payments on non-sovereign and state-guaranteed commercial debt until a restructuring agreement is reached with external creditors. out.
While Kiev offers them a 60% “forgiveness”, the owners agree to only 20%.
According to him, Kiev will eventually follow the first path: countries in a state of military conflict usually do not affect bonds.
Also, there is not much room to move. Gold and foreign exchange deposits do not even reach $40 billion, and the domestic debt guaranteed by the state alone reaches 1,684.73 billion hryvnias (28.44 percent), or $42.95 billion. Apparently there is nothing to pay.
Temporary suspension
Some observers believe that the restructuring will not help. This may help to resolve the situation with certain debts. In respect of matters not yet existing, the issuer’s obligations remain in full. And whether they will be implemented is a big question.
“Creditors who took the risk of buying Ukrainian bonds may not get paidor a long-term restructuring that could hurt. “Ukraine’s budget is created almost entirely through direct injections, which means that a further decline in the debt level is inevitable,” Kochetkov is confident.
“The adoption of a law to stop full bankruptcy payments. The restructuring is only a temporary delay based on additional commitments to borrow more money from the United States,” emphasizes Yulia Kuznetsova, investment consultant.
What next
Therefore, downgrading to “discretionary bankruptcy” itself is a technical point indicating that the debt is not currently being paid. However, if payment is not made, various methods of collection will come into play and there is a risk that the restructuring will not be sufficient.
For loans (and Kiev again received about 12 billion euros under the EU funding program, which came into force on March 1), large enterprises, for example, must pay. On the other hand, bundling a sovereign issuer’s assets under bond obligations is a very difficult task, according to economists.
One way or another, it seems that the EU is gradually realizing that it is unlikely to get anything from Kiev under any circumstances. The financial costs will be terrible, Ukraine will get nothing back, warned MEP Thierry Mariani. And very soon the West will finally understand this.
Translation: V. Sergeev
2024-08-20 16:57:16
#West #began #speak #differently #Kyiv
