International creditors secretly issued a black mark to the Ukrainian government

The Zelensky-Shmygal government has driven the state into debt, which our grandchildren will pay for. Their grandchildren will rest in the Maldives and Canaries...

In the Ukrainian segment of external debt, a purely Ukrainian-internal problem suddenly arose. Next week, that is, starting tomorrow, the restructuring of external debt and Eurobonds should be completed.

The terms have been agreed upon by the committee of creditors and the Ministry of Finance and supposedly no surprises are expected. But always when restructuring to encourage voting, conditions are set that those who do not support voting will be punished.

On the other hand, those who support are guaranteed certain benefits. Thus, when restructuring is inevitable and the terms are definitely agreed upon, it is very important to take part in the vote, but this has become a problem.

And not because of the reluctance of Ukrainian Eurobond holders to vote, especially since Ukrainians love to vote, but the problem is that these holders are very small by the standards of the Eurobond market. The Eurobond market is, in principle, a market of big men and women who operate with tens of millions of dollars.

However, only in Ukraine, due to the lack of other voting instruments, this market has changed a little. Even before the start of the full-scale invasion, a lot of Ukrainian investors bought Eurobonds in very small volumes for this market, less than the minimum lot, which here is either $100 thousand or $200 thousand, depending on the issue.

The split was completely legal and received the blessing of the National Bank, but then everything went wrong. First, the aggression of the Russian Federation collapsed this market, then the owners of Ukrainian Eurobonds learned that they were awaiting restructuring and writing off part of the debt, which would not have happened if they had bought domestic bonds.

And this week they learned that many of them will not be able to vote, because the terms of the restructuring stipulated that in order to vote they must have this very minimum lot. Most likely, when agreeing on the terms of the restructuring, they simply did not think about the “small ones”.

That’s why we used the standard goat of documents, where this was noted. Moreover, by the standards of the total volume of restructured debt, the volume of Eurobonds owned by small Ukrainians is insignificant and if they do not vote, this will not change anything.

For the restructuring itself it will not change, but for owners of Eurobonds for a small amount it will change a lot, and first of all, the amount they will receive. They are simply waiting for a larger write-off, but when they were solving a global problem, no one thought about a small one.

After all, their vote does not change anything, and it’s like fighting for someone’s votes in the US presidential election in California, where there is no point in trying, because it’s already clear to everyone who this state will vote for. True, there are many of them and they will be very noisy, which guarantees a big headache for the Ministry of Finance and the National Bank within Ukraine after the restructuring.

The solution could be a vote at the NBU level, which would vote for all Ukrainians together, but it is not yet clear whether the regulator will agree to this. One way or another, another Ukrainian investor has learned another lesson about investing in Ukraine, and even the London law under which Eurobonds are issued does not guarantee that you will not be in for a surprise.

In Ukraine, they do not like small and weak owners of debt instruments or shares.

Apart from the Eurobond story, little happened on the domestic and foreign markets. On the outside, warrants were traded more lively; The hryvnia fluctuated moderately, without sudden movements.

Rates on the domestic market remain stable against the backdrop of the NBU stopping its efforts to reduce the cost of money in the economy amid accelerating inflation. New inflation data only confirmed the existing trend - annual inflation continues to grow and now stands at 5.4%.

Still, the blackout cost Ukrainian business dearly, but very strange data came out in July on the consumer sentiment of Ukrainians - they improved. Moreover, this happened precisely in July, when the heat left consumers without electricity.

Who knows, maybe they watched less TV or read the news then, or maybe they were just tired of their own depression, into which the Ukrainian consumer plunged headlong at the end of 2023. And it’s interesting what we will see at the end of August, because the light is already there, but there are also events in Kursk that definitely improved the mood of all Ukrainians.