CAMPAIGNS: Financial PR - Ukraine puts off the debt collectors

Client: Ministry of Finance of the Government of Ukraine and ING Baring

Client: Ministry of Finance of the Government of Ukraine and ING


Campaign: Restructuring of Ukraine’s external debt

PR Team: Gavin Anderson

Timescale: Feb - Apr 2000

Budget: Undisclosed

Since the break up of the Soviet Union, the Republic of Ukraine has been

trying to move to a free market economy. A new government was elected

last year promising radical economic reform.

Over the following two years Ukraine was due to repay dollars 2.7

billion of debt to the holders of five different existing bonds.

Unfortunately the large repayments, coupled with depleted foreign

exchange reserves, precipitated a liquidity crisis. The new

administration faced the choice of either meeting its bond payments or

pushing ahead with economic reform. If it met the payments, economic

development would be hampered. But if Ukraine defaulted it would

permanently damage its ability to borrow and harm its long-term economic


The way out of this was to try to reschedule payments on the bonds over

a longer period of time through an international bond exchange



To persuade bond holders - global institutions and private investors in

Germany, Switzerland, Italy, France and Belgium - of the merits of

exchanging their current bonds for those with a later repayment


It was also essential to maintain the government’s credibility with the

international capital markets, so the Ministry of Finance set a target

of consent of 85 per cent of all bond holders before the exchange could

go ahead.

Strategy and Plan

This was a complex technical issue, which had to be kept newsworthy for

long enough to announce the plan and then explain all the details.

The central idea was to use as many means as possible to reinforce

presentations made by Ukraine’s investment bankers to financial

institutions. It was felt that this would improve the chance of the

message reaching the 5,000 or so private bond holders scattered

throughout Europe.

The scheme was launched in London with a roadshow hosted by the

Ukrainian prime minister and finance minister. This enabled the

Ukrainian government to speak directly to institutional investors. The

roadshow then moved to other financial centres, with meetings being held

with major financial and capital markets media across Europe.

A web site was set up (in English and German) along with a helpline in

four languages to explain the mechanics of participating in the new


Once the scheme, which was lead-managed by ING Barings, had been

announced, the second stage of the campaign was launched. Individual

briefings with 50 financial and retail investor titles across Europe

were set up to explain the Ukrainian government’s plans for economic

reform and to reassure bond holders.

Measurement and evaluation

The news of the rescheduling plan was widely reported but some initial

media reaction was cynical. Although rescheduling debt held by

institutions is common place, this was the first time that a country had

attempted to reschedule debt through an exchange held by so many private

individuals abroad.

Nonetheless a constant flow of news was maintained as papers reported

first the announcement, then the terms of the rescheduling, then the

road show and finally the level of acceptances. No formal media analysis

was conducted, but the team at Gavin Anderson analysed media coverage of

the issue and reported back on a daily basis to the Ukrainian


The web site has attracted about 10,000 hits, 6,000 of those within the

first four days of terms being announced. At its peak, the helpline was

receiving around 80 calls a day, mostly from German retail


Any media that were inaccurate or had failed to grasp the mechanics of

the issue were contacted and set straight. The result was not only a

high level of ongoing coverage but also a shift to a far more positive

tone about the country’s economy.


There was no room for equivocation with this campaign. Either it reached

its target of 85 per cent acceptance of the offer or it didn’t. In the

end 99 per cent of all institutional bond holders signed up for the

scheme and Ukraine had successfully delayed its payments without

compromising its long-term economic prospects and standing in

international capital markets.

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