Greece vs. Ukraine: It Matters Who Lends You Money

Coins and papers reflect debt and financial distress.

Image: Shutterstock

With economies struggling all over the world, and in Europe in particular, it’s no surprise that many countries in financial distress are looking for guidance. As countries like Greece and Ukraine struggle to overcome their massive debt, both countries have reached out to what might seem like a strange choice for a governmental financial advisor: the private company Lazard.

It’s actually not the stretch it might seem to be at first. Lazard has a history of working with governments: in 2012 a Lazard team led by Matthieu Pigasse helped push through one of the largest debt restructurings of all time for Greece. Lazard has also advised Egypt, Mauritania, and the Democratic Republic of Congo. And just last year, Lazard helped Ethiopia debut a $1 billion sovereign-bond issue.

“In uncertain or uneven environments, our business model does well, because people are looking for independent advice,” said Matthieu Bucaille, Lazard’s chief financial officer.

“There is a perceived absence of conflicts of interest,” added Francis Fitzherbert-Brockholes, a debt-restructuring expert at the law firm White & Case, in explanation for why partnering with companies like Lazard is appealing to many governments struggling with debt.

But the type of financial issue does make a difference in terms of what a company like Lazard can accomplish to help a government in debt. Greece, for example, is mired in political issues, with protests focusing on actions in World War II and Greek resistance to Germans. Ukraine, on the other hand, is involved in negotiations with private bondholders such as Franklin Templeton Investments, which gives them more leeway to work toward an amicable solution.

And for Ukraine, at least, the initial results are in. After months of stalemate, a group of Ukraine’s creditors has agreed to make a small reduction, or haircut, in the $19 billion the country still owes. Franklin Templeton, which holds about $8.9 billion of the bonds, sent a new proposal to the Ukraine government including the haircut—smaller than the 40% Ukraine wanted, but still potentially helpful. This progress comes after Ukraine paid a $120 million coupon on its bonds in July.

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