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Hasenstab not as lucky in Ukraine as in Ireland

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Michael Hasenstab

Michael Hasenstab

Michael Hasenstab

The US investment guru who reaped around €1.9bn after correctly forecasting that Ireland would not default during the darkest period of the debt crisis now faces crunch talks over a second massive bet, this time on Ukraine's bonds.

The giant Franklin Templeton investment firm is reported to have begun a process to form a bloc of bondholders who will jointly face Ukraine's government in debt negotiations as the war-torn country's debt crisis worsens.

Ukraine's government said last Friday that it may inflict so called haircuts on bondholders, the fate Franklin Tempelton avoided here.

Under "contrarian investor" Michael Hasenstab's direction Franklin Templeton became Ireland's biggest private creditor in 2011 by amassing government bonds cheaply on the markets when other investors were fleeing. Hasenstab reaped almost €2bn for his investors on the massive Irish punt, buying bonds at a discount when conservative investors were pulling out of the market and seeing values rocket as the economy here bounced back.

But, an attempt to repeat the trick in Ukraine ran into serious difficulties as the country has collapsed into revolution and bloody civil war.

Government

Franklin Templeton holds as much as $7bn of Ukrainian government bonds, according to Bloomberg.

The US firm is Ukraine' biggest private sector creditor and directly in the firing line if the country burns bondholders in a coming debt restructuring.

On Friday Ukraine's Finance Minister Natalie Jaresko said a bond restructuring may include write downs for investors, lower interest and term extensions.

Irish Independent