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12 November, 2013 21:00   ▪  

Financial Times: Franklin Templeton takes $5bn Ukraine debt gamble

Franklin Templeton, a big US money manager known last minute bets in the sovereign debt market, has appeared to be the dominant bankroller of Ukraine despite the country teetering on the edge of an economic crisis, The Financial Times reports.

The investment group has snapped up Ukrainian international debt with a face value of almost $5bn at the end of August, nearly a fifth of the country’s outstanding international government bonds, according to data gleaned from Bloomberg.

“The investments have been directed by Michael Hasenstab, who was also the architect of Franklin Templeton’s massive purchase of Irish debt, which helped calm the country’s financial markets in the wake of the eurozone crisis,” The Financial Times reports.

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Mr Hasenstab’s Irish bet has influenced much Dublin’s rehabilitation in bond markets – and has also paid off handsomely for Franklin Templeton – “but the Ukrainian move is potentially even riskier,” FT admits.

The cost of insuring against a Ukrainian default is among the highest in the world, and most analysts and investors expect it is only a matter of time before Ukraine either succumbs to an International Monetary Fund programme, a Russian rescue package or crashes altogether.

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