BlackRock and others want 500 million dollars in interest every year, so now they can also get part of the Norwegian aid.
The Wall Street Journal writes that Ukraine’s creditors, led by the giant fund BlackRock, have created a group that has collectively made demands to the government in Kiev that Ukraine must start paying interest on the loans the country has taken out.
Ukraine’s creditors said after the Russian invasion in 2022 that Kiev could wait to pay them back. Now their patience is running out.
A group of foreign bondholders including BlackRock and Pimco plan to pressure Ukraine to start paying interest on its debt again as soon as next year, according to people familiar with the matter.
The group, which holds about a fifth of Ukraine’s $20 billion in outstanding Eurobonds, recently formed a committee and hired lawyers at Weil Gotshal & Manges and bankers from PJT Partners to negotiate on its behalf.
The group wants Kiev, which has recently been promised about $60 billion in US aid, to enter into an agreement in which it will resume payments in exchange for forgiveness of a large part of the country’s outstanding debt. Some bondholders in the group have discussed the plans with senior officials in Kiev.
Reutersciting four people, previously reported that a two-year moratorium on payments agreed between holders of $20 billion in outstanding bonds will expire in August.
Efforts to consolidate creditors are moving on several fronts, the sources said. They added that the Ministry of Finance has approached some investors to create a group of creditors. This group can comprise from eight to twelve capital managers.
They remind that Ukraine signed amendments to the Memorandum of Understanding on the suspension of payments on official debt with the G7 countries and the Paris Club. This is evident from the message from the Ministry of Finance in Kyiv.
“This will extend until the end of March 2027, which corresponds to the end of the current IMF EFF program, Memorandum of Understanding on the suspension of payments on public and publicly guaranteed debt with a group of official creditors Ukraine from the G7 countries and the Paris Club, signed 14 September 2022, says the Ministry of Finance.
Earlier, the International Monetary Fund supported the moratorium on the payment of Ukraine’s external debt, which will be valid until 2027.
Will have far-reaching consequences
The fact that the most powerful group of creditors demands interest on the loans to Ukraine will have far-reaching consequences. This naturally means that other lenders will also come forward and report their demands. No one wants to be last in line.
When BlackRock & co indicate a willingness to reduce debt, one should not think that it comes for free. It is common for such vultures to be paid in kind, such as agricultural land, factories and mineral resources.
The fact that the creditors now want their “pound of flesh” means that part of the foreign aid, such as the billion-dollar flood from Norway, will go directly to BlackRock & co. It is good to know for the “anti-imperialist” war front in Norway.
The vultures are gathering over Ukraine
Thomas Fazi wrote the article in July 2023 The capitalists are circling Ukraine. There he writes:
Last year, the Ukrainian government outsourced essentially the entire post-war “reconstruction” process to BlackRock, the world’s largest asset management firm. They signed an agreement to “provide advisory support for the design of an investment framework, with the aim of creating opportunities for both public and private investors to participate in the future reconstruction and development of the Ukrainian economy”. In February, JP Morgan was also brought on board.
The two banks will operate the Ukraine Development Fund, which aims to boost private investment in projects potentially worth hundreds of billions of dollars across sectors including technology, natural resources, agriculture and health. BlackRock and JP Morgan donate their services, but, as Financial Times noted, “the work will give them an early insight into possible investments in the country”. The opportunities are significant, especially in the agricultural sector: Ukraine is home to a quarter of the world’s chernozem (“black soil”), an exceptionally fertile soil, and before the war it was the world’s leading producer of sunflower meal, oil and seeds, and one of the largest exporters of corn and wheat.
From certain perspectives, war is clearly good for business: indeed, the greater the destruction, the greater the opportunities for reconstruction. At Davos this year, Larry Fink, chief executive of BlackRock, said he hoped the initiative would make the country a “beacon of capitalism”. Goldman Sachs CEO David Solomon also spoke cheerfully about Ukraine’s post-war future. “There is no doubt,” he said, “that when you rebuild, there will be good financial incentives for real returns and real investments.”
Seeing opportunity in the midst of tragedy, 500 global businesses from 42 countries have already signed the Ukraine Business Compact “to help realize its enormous potential” – or secure their share of the Ukrainian pie. “Most are on the sidelines at the moment, given the security threat,” reported FT . “But there are already companies that are on the verge of moving in – especially in the industries they regard as low-hanging fruit in construction and materials, agricultural processing and logistics.”
The claim from the creditors now shows that the party is over for Zelensky & co in Kiev. Now it is payback hour and finance capital will feed on the spoils while there is still something to take.
