U.S. creditors demand Ukraine pay back! $500 million in interest per year

Release time:May 07, 2024 09:23 AM

For Ukraine, which is mired in conflict, daily military spending is a heavy financial burden. The latest bad news is that Ukraine will soon have to add another financial expense of interest repayment on top of the cost of the conflict.

According to authoritative financial media reports, U.S. debtors represented by BlackRock, Pacific Investment Management Company, etc. recently reached an agreement in negotiations with the Ukrainian government. Ukraine will start paying interest on its bonds next year at the latest, which takes about one year. $500 million.

Prior to this, Ukrainian President Zelensky’s attitude had always been to hope that bondholders would “raise their hand” and allow the Ukrainian government to temporarily suspend interest payments and principal repayments until the conflict was won. The U.S. "creditors" involved this time purchased Ukrainian government bonds in 2022 and have given Ukraine a two-year buffer period to suspend interest payments. Nowadays, U.S. investment institutions can no longer wait for the "big pie" of victory in the conflict, and force the Ukrainian government to start repaying interest as soon as possible.

Media analysts believe that the U.S. Congress recently passed approximately $60 billion in aid to Ukraine, which has made "creditors" believe that Kyiv is able to repay the money. Also "eyeing" this aid is White House Security Advisor Sullivan. Sullivan told the British media on May 4 that with this aid as a foundation, Ukraine should be able to launch a major counterattack in 2025. However, the reality is not as "fulfilling" as the ideal. Some media reported that most aid to Ukraine will be delayed for "at least several months" before being released. During this period, the Russian army is likely to continue to expand its advantages on the battlefield.

According to reports, a group of creditors composed of a group of U.S. asset management institutions such as BlackRock and Pacific Investment Management Company hired professional international law lawyers to start negotiations with the Ukrainian government last week. In April this year, the International Monetary Fund held a meeting with creditors and the Ukrainian government to investigate the basic situation.

This group of creditors holds approximately US$4 billion in Ukrainian bonds, accounting for one-fifth of Ukraine's liabilities in the European market, and does not account for a high proportion compared to the country's total foreign debt of nearly US$200 billion. The previous negotiations between the two parties were quite difficult, mainly because the Ukrainian government was worried that once the precedent of interest repayment was set, other creditors would follow suit and demand repayment, increasing Ukraine's financial burden. In addition, the U.S. government is not happy to see that aid funds to Ukraine give priority to interest payments to financial institutions.

It is reported that this group of creditors purchased Ukrainian bonds in July 2022. At that time, they agreed to give the Ukrainian government a 2-year "grace period" to suspend interest payments. However, a major prerequisite for setting this grace period was that the Ukrainian government believed at the time that 2 The conflict can be won within a year. Now the hope of victory is very slim, and the creditor group is unwilling to extend the grace period.

According to reports, the negotiations are nearing completion, and Ukraine has agreed to most of the conditions of the creditor group and will begin repaying bond interest in 2025 at the latest. Ukraine's move also has a lot of helplessness. Once the negotiations break down and the two sides are unable to resolve their differences, Ukraine will become a party to default after August this year, making it more difficult for them to raise funds in the international financial market in the future. Today, Ukraine's credibility in the international market is already very low. According to data compiled by the trading agency AdvantageData, Ukrainian bank and private sector bonds can only circulate in the international financial market at a "fracture-breaking" price. Each US dollar of bonds can only Sold for 25 to 35 cents.

On May 4, local time, U.S. National Security Advisor Sullivan was a guest at a British media readers’ weekend salon and talked about his views on the situation on the battlefield in Ukraine.

Sullivan said that although the U.S. Congress approved an approximately $61 billion aid plan to Ukraine, he believed that these weapons, materials and funds would have a significant impact on the battlefield pattern. "With these aids, Ukraine can hold on to the front at least in 2024 and launch a counterattack in 2025." He also said that he had received information that Ukraine had a counterattack plan.

However, local media in Ukraine are far less optimistic than Sullivan. The media reported that there is currently no evidence to prove that US weapons assistance has reached the battlefield, especially the 155mm howitzers that the Ukrainian Army is most in need of. Due to a shortage of weapons and manpower, the Ukrainian army was passive on the eastern front and lost the important defensive town of Avdievka in February this year. After occupying Avdievka, the Russian army continued to advance into six surrounding villages. The Russian Ministry of Defense stated on May 5 that Russian troops had occupied the village of Ocheretain in the area.

An anonymous Ukrainian military official believes that U.S. military aid may not arrive until this summer or even the end of the year, and the Ukrainian army will face the most difficult situation while waiting for weapons support. He has made preparations for the Russian army to continue to advance the front. Prepare. An official from the Kiev city government also said that Kiev has "actually" run out of Patriot missiles, which are the weapons that Kiev's air defense system most relies on.

Red Star News reporter Zheng Zhi comprehensive CCTV news reference information

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