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Archive for July 17th, 2009

Investors want greater transparency after Ukraine CDS prices soar

Posted by the Editor on July 17, 2009


Analytics / 17 July 2009 | 18:00

Investors want greater transparency after Ukraine CDS prices soar

Investors want greater transparency after Ukraine CDS prices soar

The lack of transparency in the credit defaults swaps market has been a cause for concern in Ukraine, where the cost of insuring bonds against default rocketed to astronomical levels this year, writes David Oakley .

Ukraine’s sovereign CDS price surged to a record 5,383 basis points on March 5 – extremely high, even accounting for the country’s dire economic outlook. Argentina, which has a much weaker economy, has never had such high levels.

The cost of insuring Ukraine debt rose sharply from about 3,000bp at the start of February, leading to speculation at the time that the price jump would benefit some of the banks because they had large short positions through buying CDS contracts at much lower levels.

Investors speculate that one bank thought to have hedged itself by buying Ukraine’s CDSs was Morgan Stanley, which had also pulled a loan for Ukravtodor, Ukraine’s public road fund, in early February.

Morgan Stanley would not comment on its trading positions but the bank stresses that it would not go short on a borrower deliberately in the hope that it would default.

The bank said it pulled the Ukravtodor loan because covenants were triggered when Ukraine’s sovereign ratings were downgraded as its outlook deteriorated.

Lack of liquidity in the market was also responsible for pushing prices artificially high, something that has affected the sovereign CDS prices of industrialised countries such as Austria and the UK. The cost to protect their debt shot up at about the same time as Ukraine, although to nothing like the same extent.

Austria’s CDSs hit a record 268bp in early March – almost double the levels of a month earlier, while UK prices rose to record highs of 164bp in mid-February – again almost double the levels of a month earlier.

These prices seemed artificially high considering neither country was ever likely to default on its debt.

However, in spite of the lack of liquidity and transparency, most analysts still believe CDS prices are useful and relevant.

Meyrick Chapman, fixed income strategist at UBS, says: “Credit default swaps can be a good measure of risk. CDS may not be that liquid among the sovereigns, but it is still a fairly useful measure of risk.”

 
He says investors often speculate about unusual market moves when they have been on the wrong side of a trade. “It has been known for investors to claim market manipulation when they lose money – and that can happen in any market.”
 

ForUm

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Government suspends increase of housing rates

Posted by the Editor on July 17, 2009


News / 17 July 2009 | 18:00

Government suspends increase of housing rates

Government suspends increase of housing rates

The Ukrainian Cabinet of Ministers has decided to suspend the effect of a Kyiv City State Administration resolution increasing tariffs for housing and utilities services in Kyiv, and submitted a motion to President Viktor Yushchenko on the cancellation of this document.

Kyrylo Kulykov, the chairman of the Ukrainian parliament’s commission investigating the violation of the constitution and Ukrainian laws by Kyiv officials, announced the decision taken by government on Friday.

He said that the first deputy head of Kyiv City State Administration, Anatoliy Holubchenko, had exceeded his powers by signing the resolution.

Kulykov also said that no public hearings had been held in the city regarding the increase in housing and utility rates.

 
Kyiv’s Shevchenkivsky District Court decided to suspend the effect of Kyiv City State Administration decisions of April 29, 2009 doubling, on average, tariffs for cold and hot water supply, drainage system, house maintenance, and heat from June 1. The city authorities, in turn, filed an appeal against this decision.
 
Source: UkrInform

ForUm

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Yushchenko to run for a second term

Posted by the Editor on July 17, 2009


News / 17 July 2009 | 17:12

Yushchenko to run for a second term

 President Viktor Yushchenko has once again said that he plans to run for a second term in office, He said that today in scope of his visit to Ivano-Frankivsk, ForUm informs, referring to Kyiv Post.

In particular Viktor Yushchenko said this at a round table meeting with representatives of regional mass media, which took place at his presidential residence, Syniohora, in Ivano-Frankivsk oblast.

“I will run for the presidency. I am a self-sufficient politician and I stand for the values that will give a future to Ukraine,” Yushchenko said.

“The nation has a right to choose the country’s future,” the President said.

ForUm

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President congratulated Angela Merkel on birthday

Posted by the Editor on July 17, 2009


News / 17 July 2009 | 16:04

President congratulated Angela Merkel on birthday

President Viktor Yuschenko has congratulated German Chancellor Angela Merkel on the occasion of her birthday, ForUm informs, referring to Interfax-Ukraine.

“I wish you good health, happiness and success in your responsible state work. Let your professionalism and rich experience continue serving Germany and all Europeans,” reads a letter of congratulation, the presidential press service reported on Friday.

Yuschenko said that Ukraine pinned great hopes on its partnership with Germany “that has long been one of the important political and economic partners of our state in Europe.”

Yuschenko also wished peace, prosperity and concord to Merkel and the friendly German people.

ForUm

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Ukraine and EU to speed up creation of free trade zone

Posted by the Editor on July 17, 2009


News / 17 July 2009 | 15:00

Ukraine and EU to speed up creation of free trade zone

Ukraine and the European Union have discussed the ways of speeding up the negotiations on the creation of a free trade zone, Ukraine’s Deputy Foreign Minister Kostiantyn Yeliseev said after the 12th round of talks between Ukraine and the European Union on the association agreement.

The deputy minister emphasized that of a key importance to Ukraine in the quality and content of the agreement, as well as the fact in what a measure the document will take into account the interests of Ukrainian commodity producers, and provide the opportunity of a full rather than virtual access to EU’s market.

Yeliseev noted that the technical studies conducted demonstrate that, in the strategic aspect, the creation of a free trade zone will be profitable both to Ukraine and the European Union.

He noted that in the course of the current round of talks, the parties also discussed some outstanding questions, including the preamble to the agreement, cooperation in the field of justice and internal affairs, final provisions dealing with security policy.

The parties are planning to hold the next round of talks in Kyiv in October.
 

Source: UkrInform

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NBU: Devaluation pressure on hryvnia supported by group of banks

Posted by the Editor on July 17, 2009


News / 17 July 2009 | 13:35

NBU: Devaluation pressure on hryvnia supported by group of banks

The devaluation pressure on the hryvnia is being supported by a group of banks that want to gain some income on the weakening of the national currency, the head of the group of advisers to the National Bank of Ukraine (NBU) governor, Valeriy Lytvytsky, told Interfax-Ukraine on Friday.

“The National Bank knows which banks are making money off speculative attacks. We wonder how some financial institutions can work for the sake of a short speculative result and are not interested in the fact that exchange rate stability can help them tackle the situation with currency loans. This is amazing shortsightedness,” he said.

Lytvytsky said that the NBU would respond to the situation on the market and support the hryvnia through interventions, and added that the central bank, however, was not planning to alter the schedule for holding currency interventions and auctions that it approved earlier.

 
“We know how to respond, and we’ll respond. But the rescue of those drowning is actually, in many respects, their own matter. So, I’d like to call on the banks that are going mad on speculative operations not to cut the branch they are sitting on. If they don’t stop, they could end up sitting on a spike, from which the National Bank won’t remove them,” he said.
 
Source: Kyiv Post

ForUm

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Unemployment rate drops in June

Posted by the Editor on July 17, 2009


News / 17 July 2009 | 12:39

Unemployment rate drops in June

Unemployment rate drops in June

The registered unemployment rate in Ukraine dropped to 2.4% as of late June 2009, the State Statistics Committee has reported.

The committee said that the unemployment rate in May was 2.6%, in April 2.9%, in March 3.1%, while in January-February 2009 it was 3.2%. In December 2008, it was 3%, in November 2.3%, and in October 1.9%.

By the end of June 2009, 658,500 people were unemployed (in May, this figure was 736,300). Of these, some 500,700 people received unemployment benefits (compared to 544,700 in May). The average amount of benefits was UAH 622.44 per month (UAH 619.68 earlier).

Of the unemployed people registered by the end of June, 362,800 were women, and most of the jobless (404,100 people) were residents of cities.

 
There were some 76,200 job vacancies in June (compared to 85,300 a month earlier). In addition, the committee said that the number of unemployed people registered with the State Employment Service was 671,000 (752,000 a month earlier). There were 88 jobseekers per ten vacancies, as was the case a month earlier.
 
Source: Kyiv Post

ForUm

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Korea believes Ukraine will overcome financial turmoil under Tymoshenko’s guidance

Posted by the Editor on July 17, 2009


News / 17 July 2009 | 11:35

Korea believes Ukraine will overcome financial turmoil under Tymoshenko’s guidance

President of the Republic of Korea Lee Myung-bak has expressed confidence that Ukraine being professionally led by Prime Minister Yulia Tymoshenko will not just overcome challenges of the global financial downturn, but will quickly achieve a dynamic growth, he said this at a meeting with Tymoshenko in Seoul, UKRINFORM learned from the Liaison Department of the Cabinet’s Secretariat.

“Korea sees Ukraine as an important center of Korean investments in Central and Eastern Europe,” the S. Korean President claimed.

For her part, the Ukrainian Premier emphasized that a priority direction for Korean investments, according to the Ukrainian government, are energy sector, machine-building, advanced technologies, infrastructure projects in road sector, construction of ports and objects ahead of UEFA EURO 2012.

ForUm

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