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Ukraine has cancelled one of its only hopes to stave off bankruptcy

The country issued a notice this morning putting off its suspiciously cheap two-year Eurobond. It looks like it's going to be the EU's responsibility...

by Emma Haslett
Last Updated: 03 Mar 2014

What with all the fireworks (literal and figurative) happening in Independence Square, many commentators have forgotten that one of the issues at the heart of all this is Ukraine’s financial situation.

The country has $12.9bn (£7.74bn) in bond debt which is due to be paid by the end of next year, on top of its current $1.81bn gas bill from Russia. By the end of 2016, it will owe about $19bn, excluding gas bills.

As part of its ever-closer ties with Russia, the country filed on Monday for a $2bn increase to the $3bn, two-year Eurobond it issued late last year. Investors would have been suspicious of its 5% coupon, had Russia not already agreed to buy up the whole lot (it’s essentially a bailout).

Ukraine was due to receive the proceeds of the sale by the end of the week – but this morning it issued a notice on the Irish Stock Exchange saying ‘no such securities will be issued’, basically cancelling the sale.

No one’s quite sure why it’s happened – ‘there is a new subtle plan’, someone told the Wall Street Journal. But the consensus is that in the battle between Russia and the EU for control of Ukraine, the EU has belatedly decided to get serious. Unfortunately, that also means the EU’s bailout fund might have to get involved. We’re sure the Germans will be delighted… 

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