Commentaries

Ukraine’s Naftogaz leaves Eurobond holders with little choice

Alexander Smith

Oct 1, 2009 14:03 UTC

The repayment date for Ukrainian state energy group Naftogaz’s $500 million Eurobond came and went on Wednesday, but all bondholders got was a coupon payment.

Talks to restructure the five-year bond have resulted in Naftogaz presenting its solution to the problem — swapping the old 8.125 percent bonds for new five-year ones which pay a slightly higher coupon of 9.5 percent and come with a government guarantee.

Given the way Naftogaz has approached its obligations to the Eurobond holders, it’s hard to see what comfort “an irrevocable and unconditional sovereign guarantee from the Government of Ukraine” will give them.

The reality though is that bondholders have little choice. Vote against the proposed exchange and they could end up with nothing at all — and a lengthy and expensive court battle on their hands.

Biden, Georgia, Ukraine and war

Paul Taylor

Jul 21, 2009 15:25 UTC

Officially, U.S. Vice President Joe Biden is visiting Ukraine and Georgia this week to balance President Barack Obama’s warming relations with Russia and reassure Kiev and Tbilisi that Washington still supports their aspirations to join NATO (but in slow motion, please). Unofficially, his mission is to try to prevent another war in an unstable region that Russia regards as its backyard.

If that sounds over-dramatic, it’s not because hostilities look imminent in either country. Georgia is licking its wounds from last year’s August war over South Ossetia. Ukraine is mired in domestic power struggles ahead of a presidential election next January. And Moscow, while determined to reassert its influence in the former Soviet republics, has enough on its hands with the severe economic fallout from the financial crisis. A major Russian military exercise in the region was well flagged in advance and passed off without leaving raised troop levels or unusual military activity.