Gazprom Bond Holders Agree to Restructuring
Over 90% of the owners of government bonds, popularly known as Gazprom bonds and issued by Ukraine in 1995 to restructure its natural gas debt to Russia and maturing in 2000 and 2001 have agreed to the restructuring conditions offered by the Ukrainian government.
This was announced by Minister of Finance Ihor Mitiukov who did not specify, however, which restructuring terms the owners of these soon to come due bonds agreed to, Interfax-Ukraine reports. According to him, later this week there will be a meeting of all participants in the Ukrainian debentures exchange, which will for the first time make public the amount of bonds to be restructured with the creditors’ consent (according to Interfax-Ukraine, the Gazprom bonds maturing in 2000-2001 total $280 million and those coming due in 2002-2007 come to $735 million).
In an interview with The Day, Vyacheslav YUTKIN, deputy chairman of the board of governors of the National Reserve Bank in Moscow, one of the major holders of Gazprom bonds, made this comment on this report:
“We think the conditions the Ukrainian government offered are optimal and fair, and we were among the first to confirm our consent to restructuring. After the innovation (a euphemism for restructuring —Author) and the main negotiations are completed on March 15 or even April 14, we hope to return to discussing our proposals aimed at restructuring the debts by exchanging hard- currency liabilities for hryvnia- based ones and investing the latter in the development of Ukrainian shipbuilding and other industries. Thus far, Ukraine’s Ministry of Finance has postponed consideration of these issues, which is basically correct because it has declared (and this is also international practice) an equal attitude toward all creditors.”
“And how would you assess the possibility of restructuring the Eurobonds?”
“The course of this process makes it possible for us to conclude that Ukraine has achieved a certain measure of success and that there is no turning back. We have received permission to restructure quite a large number of debts. Small bondholders will have to accept these conditions. Surprisingly, Ukraine behaves in quite a civilized way with respect to its creditors. This is not the question of default but of improving the structure and the liquidity of these securities. The interests of the creditors have also been taken into maximum account, as far as a borrower can. Even those who wanted immediate redemption have no grounds whatsoever for any precipitous action. Seeing a normal attitude on the part of the borrower, the creditors are accepting his offers. There might be about 2% of the most stubborn and persistent ones who will not agree to restructuring, but, as soon as those who consent form a critical mass, they will just have to follow the general rules of the game.”
“Is it, by chance, the stubborn creditors who inspire Financial Times articles aiming to discredit Ukraine and its National Bank?”
“I think not. If we attempt to look at what they could achieve by doing it, we will see they would in this way only worsen their position. If the audit’s findings are negative for the NBU and the IMF admits, on this basis, the existence of irregularities and does not resume the EFF funding of Ukraine, the financial state of the borrower country will naturally worsen and the latter will not be able to service its own restructuring. I think such a PR campaign could only be mounted by very powerful creditors owning big blocks of Ukrainian debts. But, in this situation, it is they who are mainly interested in carrying out a civilized restructuring, rather than hampering it.”
“Who then initiated the Financial Times attacks?”
“I think politics is behind this, as does the resentment of some people who believe they were undeservedly removed from the political Olympus.”
“Are you hinting at Pavlo Lazarenko?”
“It is quite possible. The facts found by the Verkhovna Rada investigative commission are now being presented by The Financial Times as its own discovery. But the truth is all the press wrote about this last year. Then many facts were not corroborated, including the allegation about failure to return hard- currency reserves. In reality, they were returned in full, even bringing good profits. There are also some controversial points. But we can say nothing for sure until the auditing firm announces its decision and makes a statement jointly with the National Bank.”
INCIDENTALLY
The audit of NBU hard-currency-reserves operations conducted by Price Waterhouse Coopers “will finish on time and its conclusions will be unbiased,” NBU governor Volodymyr Stelmakh said last Wednesday. He recalled, Interfax-Ukraine reports, that, at the IMF request, the audit had been extended from examining NBU reserves operations to checking its correspondent banks. Mr. Stelmakh simultaneously stressed that “all IMF loans were utilized for the purpose they were given for” and ruled out the possibility that any natural persons might be involved in “any possible gaining of unlawful income from NBU hard-currency-reserves operations.”
