Ukraine Pledges to Pay Bonds
The Ukrainian Ministry of Finance held a conference call with foreign bond investors on Monday to discuss the country’s wartime finances and emphasize its willingness to keep making bond payments.
Participants interspersed their questions about Ukraine’s economic and financial footing with statements of support and well wishes on the call, which took place as Russia intensified its attacks on Kiev.
“It was remarkable that the Finance Ministry had a call with investors – an impressive show of fortitude,” said one bond-fund manager who dialed in. “They assured us that [interest] payments would be made and they are working on securing financing from international financial institutions.”
The country is seeking a rapid support facility from the International Monetary Fund and is negotiating financial guarantees from the World Bank and individual countries, another fund manager on the call said. Direct aid is also forthcoming from Canada, the U.S., the U.K. and Italy, he said.
Ukraine owed about 610 billion hryvnia, the equivalent of $23 billion, of external bonds at the end of September, according to data from the State Statistics Service of Ukraine. A roughly $1 billion bond due in September was quoted around 50 cents on the dollar on Monday, while a $2.6 billion bond due in 2033 was quoted at 34 cents, according to Advantage Data Inc.
A ministry official said it would be more expensive for Ukraine to restructure its debts than to keep paying its obligations, according to the second fund manager. The official indicated that donor countries and multilateral lenders hadn't pressured the country to restructure its bonds, he said.
The ministry said that Ukrainian Treasury operations were fully functioning and revenue was being collected from most of the country, although some areas had no economic activity because of the war, the second fund manager said. As of Monday morning, the ministry had over $1 billion of liquidity, he said.
Still, Ukraine’s banking system is experiencing outflows and the country’s fiscal deficit is expected to balloon as the war slows economic activity and military and reconstruction costs climb. The Finance Ministry said it couldn't estimate its fiscal deficit or future financing needs, the first fund manager said.
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