External borrowing has gone UP! - News about real estate, Kiev, Kyiv region. Real Estate In Ukraine
Multinational banks based in the United States and lend to multinationals, last week...External loans much more expensiveMultinational banks based in the United States and lend to multinationals, last week proposed new lending rules, according to which the price of CDS (credit default swaps, i.e. insurance against default) is automatically included in the cost of credit. Some corporations that are in dire need of liquidity, were forced to accept the new rules of the game.Perhaps the new rules will apply in respect of Ukraine, the borrowers of which are now in dire need of funds. In this case, the cost of borrowing for Ukrainian companies will not be identified as LIBOR/EURIBOR country risk the risk of the borrower, the lender's return, but as LIBOR/EURIBOR CDS risk of the borrower, the lender's return. Now spread EMBI Ukraine is 1700 basis points. Almost same price and credit default swap on five year commitment of Ukraine - 1699 basis points. Therefore, today there is no difference, what scheme of calculations will be used to determine the price of bonds.The Deputy head of the NBU Alexander Savchenko believes that the market РЎDS for Ukraine - it is a virtual game. "We evaluated the market and came to the conclusion that its volume is close to zero. Any investment Fund can raise up quotes," says the official. We will remind, two weeks ago the quotes of credit default swaps for Ukraine reached 2800 basis points during the three-month LIBOR rate of about 2.3% and the yield of the lender at 7% led to an increase in effective yield public loans to 27.3%.Now rate on Ukrainian Eurobonds of the Issuer would be equal to a minimum of 16.2% (if the paper has found a buyer). Meanwhile, while the NBU resolution No. 319, limiting foreign currency lending entities and individuals that do not have foreign currency earnings, the settlement rate can fall even lower, because demand for the currency from Ukrainian banks is not expected. Placing of Eurobonds of corporate issuers is impossible, as long as the market of public loans to emerging economies closed.However, in the near future statistical correction can play a cruel joke with developing economies. The major players in the credit default swap market is the largest US investment banks (such as Goldman Sachs, Merrill Lynch, Morgan Stanley), who are now under the thumb of the Federal reserve system (FRS) the USA, as well as the chief nurse of the American banking market J. P. Morgan Chase.For the fed, poured the new dollars on the financial market to maintain liquidity, a key challenge is the launch of stock markets of developed economies and the main risk - the flight of a huge number of dollars in the commodity markets (which States threatens hyperinflation).