Ukraine’s sovereign debt freeze will trigger CDS payments

A man with a jerry can walks next to a gas station as drivers queue to try to buy fuel, amid the Russian invasion of Ukraine, in Kyiv, Ukraine May 11, 2022. REUTERS/Viacheslav Ratynskyi/File Photo

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LONDON, Aug 19 (Reuters) – A panel of investors determined on Friday that Ukraine had triggered a restructuring event after a two-year sovereign debt freeze and default insurance known as Credit Default Swap (CDS) had to be paid.

The Credit Derivatives Determination Committee (CDDC) said its members had voted “yes” to a question to determine whether a “restructuring credit event” had occurred with respect to Ukraine and that a CDS auction is expected to take place, according to a statement posted on its website.

The committee has still not decided on the timing of the auction.

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There are just over $220 million worth of CDS contracts tied to Ukraine’s debt, according to data from the Depository Trust & Clearing Corporation (DTCC).

Bank of America, Goldman Sachs International and JPMorgan Chase Bank are among the committee members who voted “yes” to the question.

The country’s international creditors last week backed Kyiv’s request to freeze nearly $20 billion of its sovereign debt for two years. Read more

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Reporting by Jorgelina do Rosario; edited by Rodrigo Campos and Toby Chopra

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John A. Bogar