Ukrainian securities suffered the worst selloff on record yesterday amid concern the country is plunging into civil war. Even before the recent violence, the Ukraine has been struggling with a weak economy, a large budget deficit and a current account deficit that is rapidly eroding the central bank’s currency reserves to mere months of import cover.
According to reports, 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 program, a Russian rescue package or crashes altogether.
Despite these risks, Franklin Templeton, a big US money manager known for aggressive bets in the sovereign debt market, has emerged as the dominant bankroller of Ukrainian debt.
Multiple reports indicate that Franklin Templeton snapped up approximately 1/5 of all Ukrainian international debt with a face value of almost $5 billion.
For example, the Templeton Global Bond Fund and the Templeton Global Total Return Fund increased holdings of Ukrainian international dollar debt by $252 million in face value to about $3.8 billion. Specifically, the Templeton Global Bond Fund added $215 million of Ukraine’s 9.25 percent notes due 2017 in the three months through December, boosting holdings of the securities to $690 million in face value.
The funds have already suffered some losses, likely as a result of the stress of the funds’ Ukrainian holdings. Continued trouble in the Ukraine could spell further problems for Franklin Templeton and the funds that over-concentrated on Ukrainian debt.
The foregoing information has been provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
If you suffered losses investing in Ukrainian debt, the Templeton Global Bond Fund, or the Templeton Global Total Return Fund, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.
For more information on the firm, visit http://www.whitesecuritieslaw.com.