Based on the Templeton experience this is probably an opportunity. Cue vultures:...From Reuters, December 29:
Ukraine's government bonds rallied on Monday as investors saw some positive signs in talks on a deal to end the war with Russia, with some bonds hitting their highest since emerging from last year's $20 billion sovereign debt restructuring.There was progress on security guarantees for Kyiv at talks between U.S. President Donald Trump and Ukrainian leader Volodymyr Zelenskiy on Sunday but Russia and Ukraine on Monday remained far apart on the main territorial issues blocking a peace agreement.Ukraine's bonds have surged in the last 1-1/2 months amid a renewed push to halt the near four-year-old war and most added another 1 cent on the dollar , , , on Monday, following a busy weekend of diplomacy.U.S. President Donald Trump said on Sunday that he and Ukrainian President Volodymyr Zelenskiy were now "getting a lot closer, maybe very close" to an agreement to end the war.Trump and Russian President Vladimir Putin held a call on Monday with Moscow also saying Ukraine had tried to attack Putin's Dolgiye Borody, or Long Beards, residence in northern Russia, an accusation that Kyiv denied.Hopes for peace have been repeatedly dashed over the last year, but the moves in Ukraine's bonds have signalled renewed optimism, among investors at least, that a truce might now be within reach.Monday's gains notably left Ukraine's 4.5% coupon 2034 and 2035 bonds - two of its most widely-traded - almost exactly where they were in early February before Trump's branding of Zelenskiy as a "dictator" and then scolding of him in the Oval Office triggered a major collapse in prices.The bonds have also been boosted over the last six weeks by plans for a new four-year, $8.2 billion International Monetary Fund programme and a 90 billion euro ($105.83 billion) European Union loan to shore up the government's finances.Kyiv has also just struck a long-awaited deal to replace the so-called 'GDP warrants' that helped it clinch is 2015 post-Crimea annexation debt restructuring, but had risked draining its finances once the current war ends....
And what, wary yet curious reader may be asking, was the Templeton experience?
Returning to the introductory post's outro:
...In the Templeton case the Templeton Global Bond Fund bought Bonds
with a face amount of $3.18 billion while the rest of Templeton brought
the total position in Ukrainian euro-and-dollar bonds to $7.6 billion, fully one-third of such paper. The purchases were ramped up in 2014.
There were rumors at the time that the fix was in with the IMF and that the debt would either be paid off or that the new post-coup government (this was in late 2013 and 2014) would make the holders whole with national assets.
There were further whispers that the whole operation was
used by Ukrainian nationals and others to do the 'ol scrub-a-dub-dub on
some major amounts of dirty money, investing in the bond fund to get a
payoff in cleaner loot.
The fund manager, Michael Hasenstab:
...said he was attracted to Ukraine by a number of factors. “First, the long term potential of this country. There’s an incredible wealth of human capital, of agricultural endowment, and Ukraine is strategically in a very important position.”
That's a big bet on the "...wealth of human capital" that had been leaving the country since the collapse of the Soviet Union in 1991.
By May 2014 the Wall Street Journal headline was: "Franklin Templeton Bet on Ukraine Gives Some Investors Pause"
In January 2015 Business Insider UK said "One Of The World's Best Bond Managers Has Lost £1.98 Billion In A Huge Gamble On Ukraine's Future"
In July 2015 Foreign Policy was reporting: "Franklin Templeton bond manager Michael Hasenstab wants Kiev to pay back money it doesn’t have. If he stands firm, Ukraine’s fragile economy could implode."
By November 2015 the Bloomberg headline was "Templeton Bond Fund Dodged Disaster Hanging Tough in Ukraine"
Bloomberg in April 2017: "Templeton's Hasenstab Winds Down $7 Billion Ukraine Bond Bet"
....The Ukrainian investment highlighted the risks of Hasenstab's unusual strategy of making outsized wagers in unloved markets. He managed to salvage the bet by helping broker a restructuring deal with Ukraine in 2015 that gave more favorable terms than expected to creditors. Since the restructuring, Ukrainian bonds have contributed to a 12 percent return to the Templeton Global Bond Fund, according to data compiled by Bloomberg.....
And Interfax-Ukraine November 2019, disappeared from internet but alive at the internet archive: "MPs demand Zelensky, Trump investigate suspicion of U.S.-Ukraine corruption involving $7.4 bln"
Back in October I asked what I thought was a simple question, "Who Owns Ukraine's Farmland?" A big part of the reason the U.S. helped overthrow the Ukrainian government was to get access to some of the best farmland in the world. Well that and the natural gas goings-on. And the billions in aid that was looted and paid as commissions and protection money and some very interesting laundry tips.
Did you know that because money and political power are fungible you can launder your ill-gotten gains into political contributions and end up with squeaky clean political influence with no one the wiser? And then use that influence to earn 'clean' money? Well now you know....
