Ukraine has managed to cut down its massive $20 billion debt, thanks to the financial wizardry of Rothschild & Co. Here’s how it all went down:
The Big Problem
Back in early 2022, Ukraine found itself in a tough spot. With the conflict with Russia escalating, the country was struggling to manage its enormous debt. Bondholders—big investors like BlackRock, Pimco, and Amundi—agreed to a temporary freeze on Ukraine’s debt payments. But this was just a short-term fix. Ukraine needed a long-term solution.
The Role of Rothschild
Enter Rothschild & Co, a financial advisory firm with a reputation for handling complex deals. Ukraine hired Rothschild in 2017 to help manage its finances. By mid-2022, when initial talks to restructure the debt fell through, Rothschild stepped up. They set up crucial face-to-face meetings in Paris between Ukraine’s representatives and the bondholders. This was a make-or-break moment.
The Negotiations
The first round of talks had not gone well. Bondholders were unhappy with Ukraine’s demands, which they thought were too high and would hurt their financial interests. With time running out before a crucial payment deadline, Rothschild pulled off a diplomatic coup. They organized intense negotiations where both sides could meet directly and hash things out.
The Breakthrough
After some high-stakes discussions, a deal was struck. Ukraine agreed to write off about $8.7 billion of its debt, which is around 37% of what it owed. In return, bondholders got what they wanted: immediate coupon payments and a simpler way to get their money back. The deal also included a new bond linked to Ukraine’s economic growth, making it easier for the country to manage.
The Outcome
This deal was a massive win for Ukraine. It will save the country $11.4 billion over the next three years, which is crucial for both its ongoing conflict and its international financial support from the IMF. The restructuring deal was one of the largest and fastest of its kind, only surpassed by those made by Argentina and Greece.
The Final Approval
The deal received overwhelming support from bondholders—over 97% voted in favor. The IMF and other international creditors also gave their nod, confirming that the agreement was in line with the $122 billion aid package Ukraine was receiving.
Rothschild’s role was key in turning a potential financial disaster into a manageable solution, helping Ukraine breathe easier as it navigates through its challenges.
