Moody's 2015 bond restructuring forecast is dubious

Обзор облигаций 24.12.2014 In its research report on Ukraine's economy, Moody's forecasts a sovereign bond restructuring next year as it stated "the risk of default is rising as the government faces roughly $28 billion in external debt maturities next year". Total debt repayments scheduled for 2015 are as follows: sovereign debt (US$6.5bn), bonds issued by quasi-sovereigns including Eximbank and the City of Kyiv (US$1.0bn), IMF debt repayments (US$0.58bn) and corporate debt (US$17.55bn). However, according to our assumptions, the majority of corporate debt repayments will be loan repayments rather than bond redemptions. Excluding quasi-sovereign debt, there is only US$1.13bn of corporate Eurobond redemptions scheduled. Investment implications: Although the volume of FX needed for debt repayments is very large, but these needs are not from the government. New loans from the IMF, the EU and other official lenders should cover the government's needs in FX and NBU repayments, as well as for quasi-sovereign bond redemptions. As corporate loans or bonds issues can be restructured or refinanced, particularly if they were loans received by banks from their parent companies, a sovereign debt restructuring is not necessary.