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Goldman Sachs: Ukraine Will Default in July

A Goldman Sachs analyst has concluded that Ukraine will be unable to make payments on its debt next month — resulting in default


This post first appeared on Russia Insider


Ukraine is facing financial ruin within the next 30 days, according to a Goldman Sachs report on the situation in Kiev. According to Bloomberg

The government is unlikely to resolve a disagreement with its creditors on its debt repayment plan in the coming weeks and will likely issue a moratorium before skipping a July 24 coupon payment, analyst Andrew Matheny wrote in a research note on Wednesday. Ukraine has asked creditors to take a 40 percent writedown in principal and accept new bonds tied to its future economic performance under its repayment plan.

<figcaption>The vampire squid</figcaption>
The vampire squid

“Ukraine will not make the July 24 coupon payment and, as a result, will enter into default at that point,” Matheny said of his base-case scenario in the report. “We do not expect the ad hoc committee to accept Ukraine’s latest restructuring proposal.”

Ukraine's parliament has already passed legislation allowing it to impose a moratorium on debt payments, and the IMF has signaled its willingness to "help" Ukraine whether it defaults or not. So it's not exactly clear how a default would actually play out. With enough tainted IMF cash, the charade that is post-Maidan Ukraine could continue more or less uninhibited. 

What is clear is that by the end of summer, Ukraine will be in full meltdown — due to a new offensive against Donbass, or complete financial collapse, or both.

 


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