Ukraine bond holders look to make more deals

Investors who swooped on the country's distressed debts could agree to more restructuring

Ukraine's economy has plummeted since Russia moved into Crimea in early 2014

Having cemented a deal to restructure the debts of war-torn Ukraine this week, a group of investors are now turning their attention to the municipal bonds issued by the capital city Kiev.

Franklin Templeton and several other firms bought $18bn-worth of Ukrainian of bonds after Russia’s move to annex Crimea, hoping to recover some of the value.

As the clock ticked down on the first tranche of bonds, which were supposed to be repaid by Ukraine on September 23, the investors were offered a sweetened deal to restructure the debt.

The Ukrainian authorities, through their London legal advisers White & Case, first set out a proposal to avoid default in August.

The investors, advised by the London law firm Weil, Gotshal & Manges, have agreed to a 20pc haircut on the bonds, plus higher interest payments and warrants that will only pay out if the economy grows by 3pc a year. They will vote to complete the restructuring in mid-October. Citibank and Bank of New York Mellon are assisting with the transfer.

However, the International Swaps and Derivatives Association has this week set in motion a ruling that Ukraine defaulted on its September bonds, which could trigger almost $400m-worth of credit default swaps.

Ukraine’s bonds maturing this year were trading last week for $78.75, at a steep discount to their face value.

“Despite a very challenging environment, these efforts have progressed in line with the IMFsupported program and have started to bear fruit,” said Christine Lagarde, the head of the International Monetary Fund, another lender to Ukraine, in an open letter this week.

“High participation by all concerned Eurobond holders in the upcoming debt exchange is paramount, since Ukraine lacks the resources under the program to service its debts on the original terms.”

Meanwhile, the city of Kiev is hoping to negotiate on $250m-worth of bonds that mature in November. These bonds have attracted a similar group of investors to the national debts. The capital also has a $300m debt tranche maturing in July 2016.

Ukraine also has a $3bn bond repayment due in December, which is owned by Russia and has not been part of the restructuring.

By Marion Dakers

Russian troops will not fight in Syria 'for now', says Putin

Vladimir Putin denies battlefield role for Russian forces in Syria ahead of key UN speech, but reiterates calls to support Bashar Assad's embattled Syrian government

Russia's President Vladimir Putin (R) gives an interview to American journalist Charlie Rose for CBS

Russian ground troops will not take part in battlefield operations in Syria“for now”, but Russia will continue to provide close support to Bashar al-Assad in an effort to “save” the embattled Syrian regime, Vladimir Putinhas said.

Speaking ahead of a much anticipated speech to the United Nations General Assembly later today, Mr Putin said the recent Russian military build up in Syria was prompted by domestic security concerns, and denied plans to expand Russia’s role in the greater Middle East.

Russia's President Vladimir Putin (R) and Syrian President Bashar al-Assad 

“Russia will not take part in any field operations on the territory of Syria or in other states; at least, we do not plan it for now. ” Mr Putin told CBS interviewer Charlie Rose. “But we are thinking of how to intensify our work with President al-Assad and out partners in other countries.”

“There are more than 2,000 militants in Syria from the former Soviet Union. So instead of waiting for them to return back home we should help President al-Assad fight them there, in Syria,” he added, according to a Kremlin transcript of the interview, which was broadcast in the US on Sunday night.

Mr Putin is due to address the United Nations General Assembly for the first time in 10 years on Monday, ahead of a bilateral meeting with Barack Obama.

It will be the first talks between the two leaders in two years. Mr Putin is expected to use both events to call for an international alliance against Islamic State that would include the Syrian regime.

A baby is rescued after an airstrike by forces loyal to Assad in Damascus

Mr Obama and other western leaders have ruled out cooperation with Mr Assad, saying his forces are responsible for the vast majority of civilian deaths and that most refugees arriving in Europe are fleeing government violence. Mr Putin described that view as “anti-Syrian propaganda.”

In an earlier released extract of the interview Mr Putin confirmed that one objective was to "save" Mr Assad's regime, which suffered a series of battlefield setbacks earlier this year.

President Putin: Russian ground troops will not take part in battlefield operations in Syria ?for now?

The comments follow a flurry of Russian military and diplomatic activity across the Middle East that has been described by western diplomats as an attempt to overcome nearly two years of international isolation following Russia’s annexation of Crimea and backing of a separatist uprising in east Ukraine.

Challenged on his government’s policy on Ukraine, Mr Putin attacked the United States for organising what he called a “coup” to overthrow Viktor Yanukovych, the former president of Ukraine in February 2014.

“We know the ways the assistance was provided, we know how much they paid them, we know which territories and countries hosted trainings and how it was done, we know who the instructors were. We know everything,” he said. He did not provide details.

A satellite image showing MI-24 attack helicopters at Bassel Al Assad Air Base in Syria

He denied using military force to attempt to restore what he sees as “legitimate power” in Ukraine. Western governments accuse him of sending troops and weaponry to support the separatist side in the 17-month war in Ukraine's Donbass region.

In other comments, Mr Putin said he still stands by his famous 2005 remark that the collapse of the Soviet Union was the "greatest geopolitical catastrophe of the twentieth century," and said the Russian diaspora abroad remained a major issue.

“Do you think it is normal that 25 million people, Russian people, suddenly found themselves abroad? The Russians have turned out to be the largest divided nation in the world nowadays.” he said.

"The Soviet Union has traditionally been called Russia, the Soviet Russia, and it was the great Russia. They used to live in one country and suddenly found themselves abroad. Can you imagine how many problems came out?"

Protecting the post-Soviet Russian diaspora was one justification the Kremlin gave for annexing Crimea in March 2014.

Asked about Republican presidential candidate Marco Rubio's characterisation of him as a gangster, saying his background as a spy precluded involvement in organised crime.

“How can I be a gangster, if I worked for the KGB? It is absolutely ridiculous,” he said.

Mr Rubio said last month that Mr Putin is "basically an organized crime figure who controls a government."

By Roland Oliphant

НТВ «сделал» политологом британского врача

Российский телеканал НТВ в вечерней программе «Сегодня» 17 сентября назвал британского врача Роберта Лефевера политологом. При этом Лефевер назвал «британскую вещательную корпорацию Би-би-си такой, которая существует на государственные средства и обслуживает государственную машину».

В сюжете корреспондента телеканала Лизы Герсон речь шла о введенных в Украине санкциях против журналистов иностранных СМИ, в том числе троих сотрудников Би-би-си, которые, однако, позже были исключены из списка.

Ukraine bans dozens of foreign journalists as 'threats to national security

Kiev criticised for blacklisting journalists including senior BBC correspondents and Spanish reporters missing in Syria alongside Russian officials and separatist leaders

Ukrainian President Petro Poroshenko

Ukraine’s government has come under fire after banning dozens of foreign reporters from the country over unspecified “security threats”, in a move condemned by reporter’s groups and media organisations.

Forty-one journalists and bloggers, including three members of the BBC’s Moscow bureau and two Spanish reporters believed to have been kidnapped by Isil, were listed as threats to national security in a decree released on Wednesday evening.

Steve Rosenburg has appeared on the list

The decree, signed by Petro Poroshenko, the president, lists 388 individuals cited as “actual or potential security threats,” and subjects them to sanctions ranging from entry bans to freezing of their financial assets.

The targets include Sergei Shoigu, Russia’s defence minister, Ramzan Kadyrov, the president of Chechnya, and other Russian officials believed to have taken part in or supported the annexation of Crimea and subsequent war in eastern Ukraine. Also blacklisted are several European politicians who agreed to act as observers in referendums and elections held in occupied Crimea and separatist-controlled parts of eastern Ukraine.

Banned journalists include BBC Moscow correspondent Steve Rosenburg, producer Emma Wells, and cameraman Anton Chicherov.

Also on the blacklist are Antonio Pampliega and Angel Sastre, two Spanish reporters who disappeared in Syria in July and are believed to have been kidnapped by the terror group Isil, and two reporters for Russian agencies based in South Africa and Turkey and with no apparent links to Ukraine.

All three of the BBC journalists have reported extensively from Ukraine since the outbreak of the crisis there in early 2014.

Andrew Roy, the BBC’s foreign editor, condemned the move as “a shameful attack on media freedom”.

“These sanctions are completely inappropriate and inexplicable measures to take against BBC journalists who are reporting the situation in Ukraine impartially and objectively, and we call on the Ukrainian government to remove their names from this list immediately,” he said in a statement.

The Committee to Protect Journalists, a New York-based NGO that works to defend reporters working in hostile environments around the globe, called for reporters to be removed from the black list.

“This sweeping decree undermines Ukraine's interests by blocking vital news and information that informs the global public about the country's political crisis,” said Nina Ognianova, the group’s Coordinator for Europe and Central Asia.

The Ukrainian Security Service, the KGB successor agency that apparently drew up the list, said “the decision to ban journalists was made after a thorough examination of evidence,” but offered no comments on individual cases.

Yarema Dukh, a spokesman for Mr Poroshenko’s administration, said the Ukrainian Security Service would issue a statement on Wednesday morning.

By Roland Oliphant

Ukraine debt crisis: Russia refuses to accept terms as Kiev finally secures debt write-off deal with creditors

Moscow says it will not be part of a deal to write off 20pc of Ukraine's debt mountain

Kiev's finance minister has urged Russia to take part in debt restructuring

Russia has refused to accept the terms of a private sector debt write-down agreed between Ukraine and its creditors after months of international wrangling.

Kiev announced it had struck an agreement for a 20pc haircut and a four-year maturity extension with a committee of its largest private creditors over $18bn of government debt.

• Kiev faces fight with creditors as it reels from Putin's blows
• Kremlin heads for collision course with Ukraine over debt haircut

Ukraine has been battling to satisfy the conditions of an International Monetary Fund bail-out, which requires it to secure relief on its $72bn debt mountain for its war ravaged economy. The government had previously called on its creditors to accept a 40pc loss on the country's bonds.

But the terms of the deal - which provides around $3.6bn of debt relief - was immediately rejected by Moscow.

Russia holds $3bn in eurobonds and has maintained that it will be paid back at the end of the year. Moscow's acting finance minister Anton Siluanov said the country would not be part of the restructuring.

Ukraine's finance minister Natalie Jaresko urged the giant neighbour, which annexed part of the Crimea region last year - to accept the conditions.

"I’m offering Russia a restructuring opportunity that is the same as everyone else’s,” she said.

“I’m hopeful that they will participate in this. It’s the best way to depoliticise this. It’s the best way for us to all move forward together.”

Ukraine's economy has been decimated by its conflict with Vladimir Putin's Kremlin. The country has lost a fifth of its entire economic output, seen its debt pile rise to unsustainable levels and the currency collapse by more than 60pc against the dollar.

With fighting still raging with pro-Russia separatists in the east, GDP is set to contract by a further 8pc this year - the worst of any economy in Europe, the Middle East and Africa. Economic output fell by an extraordinary 17.8pc in the first three months of the year.

Under the terms of the restructuring - which was endorsed by the IMF - creditors will receive growth-linked bonds from 2021.

Ukraine will also suspend payment of $1.1bn of debt maturing over the next two months, said the finance ministry. The Russia-owned bond, along with a further $3.6bn, is due to mature at the end of 2015.

IMF chief Christine Lagarde said the agreement would "help restore debt sustainability" and urged on all bondholders to support the deal to get Ukraine back on its feet.

“I am very pleased with today’s announcement and appreciate the positive attitude of both the ad hoc Creditor Committee and the Ukrainian government", added Mr Lagarde.

By Mehreen Khan

Russia 'sends more troops to eastern Ukraine' as leaders get together for crisis summit

Petro Poroshenko, Angela Merkel and Francois Hollande are meeting in Berlin to discuss how to keep the peace agreement

French President Francois Hollande and German Chancellor Angela Merkel held a press conference before meeting with Mr Poroshenko

Fears of a return to all out warfare continue to mount in Ukraine after Petro Poroshenko, the Ukrainian president, accused Russia of sending fresh troops and equipment into the eastern part of the country.

The comments come ahead of a summit on the crisis between Mr Poroshenko, Angela Merkel, and Francois Hollande in Berlin, where the three leaders are expected to discuss how to keep a peace agreement signed in February from falling apart.

Nearly 7,000 people have died since the war between Ukrainian government forces and Russian-backed separatists broke out in April 2014.

Speaking at an independence day parade in Kiev, Mr Poroshenko praisedUkraine’s diplomats and soldiers for their work in what he called a “war for independence”, but warned that the danger of a return to all-out hostilities remained high.

“Moscow’s ‘army surplus’ has supplied fighters with 500 tanks, up to 400 artillery systems, and 950 fighting vehicles,” he said.

“Just this week three big convoys crossed out border towards Lugask, Donetsk, and Debaltseve,” he continued.

German president Joachim Gauck, right, welcomes his Ukrainian counterpart Petro Poroshenko at the presidential residence Bellevue palace in Berlin

He said that there are 9,000 Russian servicemen serving in east Ukraine, and another 50,000 troops massed on the other side of the border in Russia.

The parade to mark 24 years of post-Soviet independence saw soldiers and military equipment from the country’s armed forces parading on Independence Square in Kiev, the scene of protests that toppled pro-Russian president Viktor Yanukovych in February 2014.

Last year’s parade was overshadowed by the beginning of a Russian-backed counter offensive that inflicted a devastating defeat on Ukrainian forces. Russia denies deploying soldiers to Ukraine.

A second successful Russian and separatist offensive in February led to the signing of the second Minsk peace agreement, which lays out a roadmap to peace and imposed a shaky ceasefire that is regularly violated.

A sharp escalation in fighting earlier this month has raised fears of a return to full-scale warfare, with both sides accusing one another of readying for new offensives.

Mr Poroshenko said on Monday he believes a third major Russian-backed offensive is unlikely because improvements to the Ukrainian military and the threat of further international sanctions against Moscow.

“The enemy knows that we are ready to respond, and the cost of escalation for Russia would be very high,” he said.

"The war for independence is still continuing and we can only claim victory by combining our defensive efforts, diplomatic talent, political responsibility and steely endurance," Mr Poroshenko said.

By Roland Oliphant

Civilians killed as separatists warn of return to 'full scale' war in Ukraine

Ceasefire feared close to collapse as Ukrainian forces and Russian-backed separatists accuse one another of readying new offensives.

A man cries as he inspects debris while standing outside his damaged house, which according to locals was caused by recent shelling, in Donetsk

Several civilians were killed by shelling in eastern Ukraine on Sunday night, amid a surge in violence that has raised fears of a return to full-scale hostilities between government forces and Russian-backed separatists.

The violence came as both sides accused one another of using high-calibre artillery and multiple rocket launchers banned under the February Minsk ceasefire agreement, and a senior separatist leader warned that the region is “one step away from a return to full-scale military action.”

Denis Pushilin, the chief negotiator at the Minsk contact-group for the self-proclaimed Donetsk People’s Republic, on Sunday evening called for the leaders of the Normandy Quartet of Russia, Ukraine, France, and Germany to act to avert a return to all-out war.

A Ukrainian woman stands at her destroyed house after shelling between Ukrainian forces and pro-Russian seperatists the town of Zolote, some 60 km west of Lugansk  

“I once again call on the leaders of the Normandy format to immediately intervene, otherwise the situation will results in full scale military action,” he said.

The latest fighting concentrated on the Ukrainian-held city of Mariupol, on the Sea of Azov, and the separatist-held town of Horlivka, north east of Donetsk.

The Ukrainian military said in a statement on Monday morning that three civilians were killed when separatist shelling struck the village of Sartana, on the north-east edge of Mariupol, overnight.

Meanwhile the separatist news website DAN said three people were killed and four wounded by government shelling Horlivka.

"They were using heavy weapons. We have three men dead. Another four have various injuries," the site quoted the mayor of the town as saying.

The separatist news service later added hat two civilians were killed in shelling of the northern and western districts of Donetsk, the de-facto capital of separatist-held Ukraine.

A Ukrainian serviceman walks on a road near the town of Zolote, some 60 km west of Lugansk

The reports could not immediately be confirmed.

At least 6,500 people have been killed since the war in eastern Ukrainebroke out in April 2014.

A ceasefire agreement signed in Minsk in February resulted in a pull back of heavy weapons and slowed, but never entirely stopped, the fighting.

Last week the Ukrainian military said its forces repelled a large separatist attack on Starohnativka, a village 30 miles north of Mariupol, prompting Oleksandr Turchynov, the head of the country’s security and defence council, to warn of an imminent separatist offensive.

Starohnativka is significant because it shields the mostly government controlled motorway between Donetsk and Mariupol.

Ukrainian commanders fear the separatists may move to seize the road as a prelude to an assault on Mariupol itself.

Separatist spokesmen have called the Ukrainian claims “a lie”, and in turn accused Ukraine of preparing for its own offensive in coming weeks.

Observers from the OSCE, which maintains a special monitoring mission on both sides of the lines, have reported an increase in violence and numerous cases of heavy weapons being used by both sides in recent weeks.

In its latest report, released on Friday, the group’s observers complained of efforts to prevent them reporting on the situation, including electronic jamming of observation drones and denial of access to two separatist-controlled holding areas for heavy weapons withdrawn under the Minsk agreement.

Earlier this month four of the mission's vehicles in Donetsk were destroyed in an apprently deliberate act of arson.

By Roland Oliphant