The system of external debt management in Ukraine has turned into a kind of “thing in itself” that even a wise man like Immanuel Kant could not have guessed. Maybe because he believed in "moral law within us." In our country, if there is a certain law “inside”, then it is clearly not moral, but financial.
In recent years in the context of the external debt problem, Ukraine has focused all public attention on the so-called “debt of Yanukovych”, which is debated between it and the Russian Federation in a London court. The tactic is quite effective. Like the thieves who work in pairs in public transport: one distracts a gazing citizen with some kind of "wonder", and the other fumbles through his pockets.
While the High Royal Court decides what Ukraine received in 2013: a bribe or $ 3 billion to issue Eurobonds, the new authorities place the same billions of dollars on foreign markets, but this is not called a “bribe” now, but successful external debt management. In addition, public attention to new loans is very low: everyone wonders what will happen to the "Yanukovych money."
There is nothing wrong with the placement of external obligations, especially now when the country needs to replace old debts with new ones: it’s a standard world practice. As they say, you should not look for a black cat in a dark room, especially if it is not there. It's all about the price of this placement.
The economy of Ukraine is developing in accordance with the parametric data of the corruption, rental model. It can still be called "streaming model." The key task for local "elites" is to group small financial streams that move between millions of players into several full-flowing "rivers". We have a conventional "hydrological" map of the country where cash flows instead of water. Let's call this scheme "Dnipro-Dniester-Danube".
The conditional Dnipro is the basic domestic financial flow in the form of the state budget distribution, the procurement of state-owned companies, the housing and utilities system, and the energy market.
The Danube scheme is the control of customs and smuggling flows, such as cigarettes, woods, amber.
But we will analyze the Dniester scheme, or control over the capital market, which is now filling the “bypass channels” of the so-called investment bankers group. There are both officials and private financiers. Especially since there is practically no difference between them - such a rapid "Brownian motion" occurs there.
There are such cases in Ukraine when an official, for example, has access to a decision-making system for issuing government securities, and the husband / wife is a practicing banker who earns “for a living” in this market, including his own “half.” But what about the notorious “partitions”, the blocking of affiliated connections, the use of insider information? Everything for which the West gives prison terms. So far, nothing.
Now back to the recent history of debts. In August last year, the Ministry of Finance attracted the so-called bridge loan (intermediate, subsidiary) of 725 million dollars for a mega-short period of six months. At the same time, the rate was increased to 9.2%. The argument that such money would help us until the next IMF tranche will come sounded in favor of such a bad loan. The loan was organized in the form of a Eurobond issue, with a discount, but without a coupon. The sale took place on the Vienna Stock Exchange, the issue was organized by Goldman Sachs. Buyers, as usual, are anonymous. The very fact of this loan caused more questions than answers, because already in October of last year, that is, two months later, Ukraine placed a full-fledged issue of Eurobonds for a period of 5 and 10 years in the amount of $ 2 billion. However, the yield level there was about the same 9% and 9.75% respectively. One gets the impression that the organizers of the issue needed only a certain price benchmark to justify the speculative high rate of initial placement, and the August bridge successfully fulfilled this role. By the way, the last time our Ministry of Finance indulged in a “bridge” during Yanukovych’s time in 2010 and 2013, with the only difference that Russian banks VTB and Sberbank were then engaged in organizing the issue.
In 2018, most of the buyers of our Eurobonds were from the UK and the USA (46% and 37%, respectively). Geographically close Europen countries showed no interest in our securities (16% of buyers). Other countries accounted for just 1%. By the way, Arabs and Chinese are now investing more and more through their national funds, so, most likely, they were not among American investors, which is very strange, considering that they are hunting for high returns around the world.
The structure of buyers gives us a partial answer: 79% fell on the companies that manage investment funds. This is a very convenient technology for organizing "family investment bushes," "family funds," which are often backed by "our people," simply in flight across the Atlantic. Hedge funds accounted for only 13. The share of insurance companies and pension funds were 5%, and share of banks - 3% altogether. If you take the last two groups, then 8% of buyers are the real market demand for our securities. Another 13% are in the form of hedges are risk lovers. Almost 80% is the share of investment "pads" between the issuer and the final beneficiaries.
If we compare the yield on our Eurobonds with the maximum annual rate of LIBOR (which reflects the value of money on the international capital market), we get a "profit" in the amount of 6.6 to 7%. 70 million dollars a year comes on one billon, and 140 million dollars on two.
Of course, no one will now lend us under LIBOR, except international financial organizations, with rates are close to this indicator, and the EU. Previously, there was an opportunity to attract cheap financing under US guarantees. At the same time, the real "ceiling" of the price of borrowing is still covered by the "financial fog" for us. For non-residents, the market of Ukrainian government loans turned into a “exclusion zone”, or Terra Incognita, for which you need to travel with your own stalker or conductor, who will prompt you about the rise / fall in profitability, the planned restructuring (or, on the contrary, say that everything will be OK) . Make a clear schedule of "entry" and "exit". And not just "say / make", but "guarantee". That is, a format is needed in which there are no “barriers” between the investment business and government bodies.
Of course, we hope that our specialized anti-corruption bodies will soon develop the cases under the code names "Dnipro", "Danube" and "Dniester". Hope is the food, which the electorate is so generously fed from election to election.