Ukraine's Russian Bonds - A Gazprom Clause? - Credit Slips:
"About a month ago, smart folks zeroed in on a single clause in Russia's two-year $3 billion loan to Ukraine. The December 2013 loan was documented as an ordinary-looking eurobond, apart from a promise by Ukraine to keep its debt under 60% of its GDP. No other Ukrainian bond had the debt/GDP clause, which naturally looked awkward when the sole bondholder started hacking at the denominator of the debt/GDP fraction (Crimea, about 3% of GDP; east and south, about 45%).
Since then, I have communed a bit with Ukrainian bond prospectuses, and stumbled on another clause only found in the Russian bond. All of Ukraine's state and state-guaranteed foreign bonds cross-default to one another: if Ukraine skips a bond payment due in 2014, holders of the bond due in 2021 can accelerate. However, the Russian bond also cross-defaults to "any indebtedness ... owed to the Noteholder or to any entity controlled or majority-owned by the Noteholder". Compare the cross-default provision in this Ukrainian bond to this one (search "Events of Default", "Indebtedness of Ukraine" and "Relevant Indebtedness")."
'via Blog this'
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