Стосовно гривні
http://blogs.wsj.com/moneybeat/2014/02/26/as-if-ukraine-didnt-have-enough-headaches/
As if Ukraine Didn’t Have Enough Headaches…
Another day, another record-breaking plunge in the hryvnia.
Very few trades are being executed, and it is tough to get live, reliable levels. But this widely-watched website notes that the mid rate for USD/UAH has been quoted well north of 10 Wednesday.
On the one hand, counter-intuitively, this is could be a good sign. Ukraine would very likely be asked to let the hryvnia slide as a precondition for international aid, so this could be the market’s way of saying it thinks the country will get aid. In any case, it was overdue a hefty drop.
If you look at the terms of the Ukrainian Eurobond Russia bought in December, you will find this:
“So long as the Notes remain outstanding the Issuer shall ensure that the volume of the total state debt and state guaranteed debt should not at any time exceed an amount equal to 60% of the annual nominal gross domestic product of Ukraine.”
As keen Ukraine watcher Tim Ash from Standard Bank explains:
“Public debt was $73.1 billion as of the end of December, and around half of this was FX. With nominal GDP of around UAH1.44 trillion, and an end year exchange rate of 8.3, this gives a debt ratio of 42% of GDP. However, at an exchange rate of 10, this ratio increases to 46% of GDP,” says Mr. Ash.
He estimates this means that each ‘big figure’ move in the exchange rate (say, from UAH9 to UAH10 against the dollar) pumps up the debt ratio by 2 percentage points.
“Now around $3 billion or so is thought to be owed by Naftogas to Gazprom for debt (~2% of GDP) and there may well be other claims on the sovereign out there now, including prom notes, VAT refunds, etc, so the danger is that the above ratio may already be above 50%.
“The West is currently trying to put together a very big ticket package of support for Ukraine. However, any such support will have to be carefully weighed now against this 60% GDP threshold which might be used by unfriendly third parties to force a sovereign debt event. This just further complicates the whole Ukraine story, and any bailout will need to take this documentation into account - it may cap the scale of any bailout programme, or force official creditors to deal with the issue of private sector bondholders as part of any deal,” Mr. Ash adds.
Wednesday, Russia’s finance minister Anton Siluanov was asked about that 60% threshold.
“We have an agreement which determines particular covenants. If the covenants are violated, then we enter talks about the execution of our agreement,” he said, without elaborating on what actions Moscow would take if that occurred.
Stay tuned.
As if Ukraine Didn’t Have Enough Headaches…
Another day, another record-breaking plunge in the hryvnia.
Very few trades are being executed, and it is tough to get live, reliable levels. But this widely-watched website notes that the mid rate for USD/UAH has been quoted well north of 10 Wednesday.
On the one hand, counter-intuitively, this is could be a good sign. Ukraine would very likely be asked to let the hryvnia slide as a precondition for international aid, so this could be the market’s way of saying it thinks the country will get aid. In any case, it was overdue a hefty drop.
If you look at the terms of the Ukrainian Eurobond Russia bought in December, you will find this:
“So long as the Notes remain outstanding the Issuer shall ensure that the volume of the total state debt and state guaranteed debt should not at any time exceed an amount equal to 60% of the annual nominal gross domestic product of Ukraine.”
As keen Ukraine watcher Tim Ash from Standard Bank explains:
“Public debt was $73.1 billion as of the end of December, and around half of this was FX. With nominal GDP of around UAH1.44 trillion, and an end year exchange rate of 8.3, this gives a debt ratio of 42% of GDP. However, at an exchange rate of 10, this ratio increases to 46% of GDP,” says Mr. Ash.
He estimates this means that each ‘big figure’ move in the exchange rate (say, from UAH9 to UAH10 against the dollar) pumps up the debt ratio by 2 percentage points.
“Now around $3 billion or so is thought to be owed by Naftogas to Gazprom for debt (~2% of GDP) and there may well be other claims on the sovereign out there now, including prom notes, VAT refunds, etc, so the danger is that the above ratio may already be above 50%.
“The West is currently trying to put together a very big ticket package of support for Ukraine. However, any such support will have to be carefully weighed now against this 60% GDP threshold which might be used by unfriendly third parties to force a sovereign debt event. This just further complicates the whole Ukraine story, and any bailout will need to take this documentation into account - it may cap the scale of any bailout programme, or force official creditors to deal with the issue of private sector bondholders as part of any deal,” Mr. Ash adds.
Wednesday, Russia’s finance minister Anton Siluanov was asked about that 60% threshold.
“We have an agreement which determines particular covenants. If the covenants are violated, then we enter talks about the execution of our agreement,” he said, without elaborating on what actions Moscow would take if that occurred.
Stay tuned.