Thanks America: Ukraine Issues (US Taxpayer Backed) Bonds at 28bps Above US Treasuries

Ukraine has issued $1 Billion worth of 5-Year Notes at a stunningly low risk of only 28bps above US Treasuries – much cheaper than the cost of capital in the public markets (and from the IMF) which yield over 10%. Why? The bond is guaranteed by the US Agency for International Development and “assures full repayment of principal and interest” based on the full faith and credit of the US (Taxpayer). The Minister of Finance of Ukraine has the following press releases and pictures posted about the deal filed under Hot News of the Day:

Minister of Finance of Ukraine and United States Secretary of the Treasury signed a Declaration of Intent

15.04.14 11:47

Washington, Ukraine and U.S. signed safeguards agreement on borrowing of USD 1 billion

Along with these pictures:

You can read more about the special deal for the Ukraine on Zero Hedge where there is already a lively discussion going and in the Wall Street Journal with the latter noting:

The maximum yield will be 2.9%, the government said. By contrast, Ukraine’s existing bonds maturing in six years are yielding about 11%, according to Tradeweb. Five-year U.S. Treasurys yield 1.593%, meaning that Ukraine’s U.S.-backed bonds will be cheaper for investors to buy for essentially the same risk. Bond yields move in the opposite direction to prices. Separately the European Union Wednesday also raised 100 million euros ($137 million) from selling bonds, proceeds of which will be lent to Ukraine.

The funds will help the Ukraine to meet pressing bill payments – including the cost of natural gas imports from, you guessed it… Putin’s RUSSIA….

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