If you have been keeping up on your politics then you probably already know that the Ukraine is at the moment having a hard time when it comes to making deals with their creditors according to George Soros Ukraine. This is a bad thing because this is a requirement that they have to do in order to keep their financial support from the Monetary Fund. The actions that have been made by Russia has already started to make the economy for the new Ukraine take a horrible downfall. This has made it so that their foreign debt of $19 billion is unsustainable says George Soros. As of right now, there is a lot of talk going on within San Francisco in terms of renegotiating the debt of the country.
It is unfortunate that Ukraine is not a candidate for bankruptcy. As of right now, there is no way that a sovereign borrower is able to obtain a halt fire among the lenders and also the borrowers. There is also no way to make a negotiation between the two parties. What does this mean? It pretty much means that the Ukraine and the private lenders of them are being left to their own devices when it comes to negotiating in an environment where fighting is more possible.
The only way for the Ukraine to solve this matter is to negotiate threatening to default until the time comes that it gets the necessary debt taken off. What does this mean for the Ukraine? It means that the bondholders are probably giving them warning that if they try to default there will be none who will give investments to them for an extended period of time.
Defaults of the Sovereign type are often times very costly says George Soros. However, they are able to have some pretty time consuming effects especially the times that the lenders make the battle last longer. If the country at hand was able to reach a deal quickly with its lenders then the country at hand would be able to be back again within the market over the span of year or sometimes two. However, what stops the country from being not in the markets for so long is not the default usually but instead the problem lies within the economic crisis that had originally forced the default to happen.
The bondholders for the Ukraine are most certainly should not be ashamed when it comes to saying that they are against debt relief says George Soros. They hate it when they have to lose out on any money from an investment and feel justified in the matter. Although, who wouldn’t want their money in that situation? It is a lot of money to be lost. However, they would rather use strategies such as telling the Ukraine that debt relief is bad for the country. The best way for the Ukraine to get out of this mess is through debt relief or through default. This is a very messy situation for all those that are involved in it and the only hopes are that the problem gets solved quickly with out any more suffering.