Russia
closes $3 billion Eurobond deal for Ukraine
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[December 23, 2013]
MOSCOW (Reuters) — Russia closed a
deal on Friday to buy Ukraine's newly-issued $3 billion Eurobond, part
of a $15 billion bailout of its smaller neighbor, Russian Finance
Minister Anton Siluanov said.
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Russia offered a lifeline to Ukraine last week, helping revive the
country's economy and keep it within Moscow's orbit.
Moscow is tapping its National Welfare Fund, a rainy day reserve, to
buy $15 billion worth of Ukrainian Eurobonds. It is also offering
Kiev relief on the price of gas exports.
"The deal was closed on Friday," Siluanov told journalists on
Monday, referring to the $3 billion bond. He added that another
tranche of help will be set next year.
The non-tradable Eurobond matures in two years and has a coupon of 5
percent.
Kiev needs cash to cover its external funding gap, while the central
bank's currency reserves are depleted by efforts to support the
hryvnia and repay foreign debt.
The government owes around $8 billion in foreign debt payments next
year. The amount due for gas imports, another part of its external
obligations, is now unclear.
Ukraine paid out $1 billion per month in 2013 for gas imports,
although the sum may change next year depending on the volume
required. Russia slashed the price Ukraine pays for gas deliveries
by about one-third.
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The National Welfare Fund is intended to cover pension fund
imbalances, which amounts to 4.2 percent of gross domestic product.
(Reporting by Lidia Kelly; writing by Maya Nikolaeva,
additional
reporting by Natalia Zinets; editing by Megan Davies and Toby
Chopra)
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