Ukraine borrows $1 billion under U.S. guarantees
Ukraine this week started offering $1 billion in eurobonds on the external market with a record-low interest rate of 2.9 percent since the 5-year debt securities are guaranteed by the U.S. government, a first for the cash-strapped country.
On May 8 the Cabinet of Ministers passed a decree regulating the eurobond issue. It is virtually risk-free because no one expects the U.S. will not be able to cover principal and interest payments.
Last year, Ukraine raised $1.25 billion through 10-year, 7.5 percent interest eurobonds. Their current yield is at 10.22 percent. The nation’s 5-year dollar-denominated debt securities that currently traded could bring as much as 15.5 percent of return to their holders, while their face value of $500 million will be repaid in 2015.
However, the current eurobond issue will not let investors to earn that much.
But because Ukraine must repay $1 billion in eurobonds maturing on June 4, the new bond issuance is viewed as refinancing older debts.
http://www.kyivpost.com/content/business/ukraine-borrows-1-billion-under-us-guarantees-347749.html