Courtesy of Mish.
The Ukrainian Hryvnia fell to a record low today with warnings from Russia regarding defaults.
Russia had pledged bailout loans to Ukraine, but following the overthrow of president Viktor Yanukovych, Russia suspended the bailout. Ukraine now needs money from elsewhere.
Russia Warns of Ukraine Default
Bloomberg reports Ukraine Delays Government Vote as Russia Warns of Default.
Acting President Oleksandr Turchynov pushed back a parliamentary vote to Feb. 27 from today as he attempts to win agreement with protest leaders who orchestrated the revolt.
With Yanukovych on the run after weeks of anti-government protests turned deadly, Ukraine’s new leaders are grasping for a financial lifeline as Russia weighs the fate of a $15 billion bailout it granted in December. Russia’s deputy finance minister said there’s a high chance Ukraine will default.
While Ukrainian assets have benefited from the momentum for financial aid, government bonds snapped three days of gains. The yield on dollar debt due 2023 was up 30 basis points at 9.554 percent at 5:32 p.m. in Kiev. The hryvnia plunged 6.4 percent to a record 9.8 per dollar, data compiled by Bloomberg show.
Ukraine risks default without “significantly favorable changes” in its political crisis, Standard & Poor’s said Feb. 21 as it cut the nation’s credit rating to CCC, leaving it eight levels short of investment grade.
Russia’s Deputy Finance Minister Sergei Storchak echoed those concerns. Russia won’t be the party to declare default, though it’s under no legal obligation to disburse the remaining $12 billion of the bailout, he told reporters in Moscow today.
Lawmakers yesterday moved quickly to appoint Stepan Kubiv, the ex-chairman of Lviv-based VAT Kredobank, to head the central bank after voting out Ihor Sorkin. Kubiv plans to invite an International Monetary Fund mission, the Unian news service reported, without giving details. The central bank imposed capital controls this month to stem the hryvnia’s slide.
Ukraine Asks for $35B, Bank Runs Underway
The Financial Times reports Ukraine’s interim government asks for $35bn in loans.
Ukraine said on Monday that it needed $35bn in aid over the next two years, including urgent loans within two weeks, but the international community seemed unlikely to start talks on a big rescue package before elections in May.
Yuriy Kolobov, Ukraine’s acting finance minister, said Kiev would pursue the short-term loans from individual countries, singling out the US and Poland as potential lenders.
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