Ukraine Default Swap Holders Nurse Losses as Debt Deal Too Good
- Cost of insuring nation's debt dropped by half after debt deal
- Holders of contracts expiring Sept. 20 risk not getting paid
This article is for subscribers only.
As holders of Ukraine’s international debt celebrate a better-than-expected restructuring deal, there are few corks popping among buyers of the country’s credit default swaps.
While Ukraine’s $2.6 billion of 2017 notes surged by more than 15 cents on the dollar on Aug. 27 when Finance Minister Natalie Jaresko announced a deal with creditors, the cost of insuring the nation’s debt against non-payment with CDS dropped by almost half. That means getting back less than you paid for most holders of CDS. For those who bought contracts expiring on Sept. 20, it’s even worse: they risk losing everything unless a so-called credit event is announced in the coming 10 days.