Russia to buy $2 billion Ukrainian Eurobonds, Siluanov said

UKRAINE - In Brief 17 Feb 2014 by Dmytro Boyarchuk

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Russia will buy $2 billion of Ukrainian Eurobonds this week, Finance Minister Anton Siluanov stated today. In fact, we treat this news as a double-edged sword. On the one side, it is positive since Russian money will ease tension at the forex and will improve confidence in Ukraine’s sustainability for the next few months. On the other, we do not have clear vision what might stand behind this change of mood. As we know, during last visit of Viktor Yanukovitch to Russia Anton Siluanov stated that new wire to Ukraine will be arranged only after Naftogaz covers $2.7 billion debt for natural gas imported in 2013. Also Kremlin expressed concerns with respect to Mr. Azarov resignation and mentioned that they will talk about loan with a new prime-minister. Against this backdrop, we are inclined to see in this statement that either the Cabinet has committed to wire some part of debt for gas by the end of the week, or Yanukovitch informed Kremlin about his choice of prime-minister and Moscow was satisfied with this decision. The first case looks quite probable since today the Central bank has purchased UAH 11.1 billion ($1.3 billion) of state bonds which have been issued to replenish Naftogaz accounts. At the same time, the case with Moscow-sympathized prime-minister looks less likely since it might lead to a new wave of confrontation on the streets. Still we do not rule such step from Yanukovitch.