Goldman Sachs Group Inc. (GS), which hasn’t arranged a debt or equity sale in Ukraine since at least 1999, will advise the government of the former Soviet republic free of charge.
The bank, led by Chief Executive Officer Lloyd Blankfein, will advise the administration of Prime Minister Mykola Azarov on managing its investments, state debt and “other issues of financial-policy implementation,” the government said in a statement dated June 20 and published on its website today.
The selection follows Goldman’s third attempt in 17 years to crack the neighboring Russian market where it has been ramping up presence and wooing the Kremlin for roles in asset sales. The bank, once the most profitable securities firm in Wall Street history, wasn’t involved in a single deal since 1999 as the Ukrainian government and companies raised $41.4 billion in stock and debt sales during the period, Bloomberg data show.
Monika Schaller, a Goldman spokeswoman in Frankfurt, didn’t immediately respond to two telephone calls and a written request seeking comment.
Ukraine’s government, which in July obtained a $15.6 billion loan from the International Monetary Fund for its second bailout in two years, expects its debt servicing payments to peak between 2012 and 2016. The nation resumed Eurobond sales in 2010 after a three-year break and has sold $2.75 billion of debt so far this year. The government may issue as much as $4.5 billion in bonds in 2011, according to the budget plan.
Ukraine has also twice extended a $2 billion six-month loan from VTB Group, Russia’s second-largest bank, which it received last year.
The IMF has so far released $3.4 billion in two tranches, helping the government cover its deficit and boost foreign- currency reserves. The third disbursement, initially planned for March, has been delayed after the authorities failed to raise the retirement age and increase household utility prices.
Ukraine may receive $3 billion from the IMF in September, Deputy Prime Minister Serhiy Tigipko said June 22.
The government will have to repay 153.3 billion hryvnia ($19.2 billion) between 2012 and 2016, the Finance Ministry said Dec. 28. Ukraine’s state debt, including guarantees, more than tripled since the beginning of 2008, surging to $57.8 billion as of May 31, according to the ministry.
JPMorgan, Morgan Stanley (MS)
JPMorgan Chase & Co. (JPM), Morgan Stanley and VTB organized the government’s $1.25 billion sale of five-year bonds this month. UBS AG (UBSN), Credit Suisse Group AG (CSGN) and Morgan Stanley were the top three of the 67 underwriters of Ukrainian share and bond sales between Jan. 1 1999 and now, Bloomberg data show.
In Russia, by contrast, Goldman jumped to fourth place in handling equity sales for Russian companies last year, its highest position ever, behind VTB Capital and Renaissance Capital, both based in Moscow, and Morgan Stanley.
Goldman, the fifth-largest U.S. bank by assets, was one of the four banks chosen by Russia’s central bank June 14 to manage a sale of part of its stake in OAO Sberbank, a transaction that may be worth as much as $7 billion. It also helped sell 300 million pounds ($480 million) of sterling-denominated bonds issued by OAO Russian Railways June 15 and assisted with Russian search engine owner Yandex NV’s $1.3 billion initial public offering in May.