Templeton’s Hasenstab Winds Down $7 Billion Ukraine Bond Bet
By Natasha Doff and Marton Eder April 21, 2017
Ukraine sovereign debt drops to 3% of total portfolio from 5%. Franklin Templeton became Ukraine’s biggest bondholder in 2013. Franklin Templeton bond chief Michael Hasenstab is pulling back from one of his most contrarian bets of the past decade.
Holdings in Ukrainian sovereign debt in the flagship $40 billion Templeton Global Bond Fund he manages have dropped by half in the past year to about $1.2 billion, or 3 percent of the total portfolio, according to filings posted on the fund manager’s website. Most of the reduction was in Ukraine’s shortest-dated bonds, maturing before the end of 2021, according to data compiled by Bloomberg.
In the second [report], sent to the Washington Post on July 12, [2015] Hasssenstab wrote, that the “Ad-hoc Committee of Bondholders to the Ukraine has invested in the country for more than 10 years, under successive governments, to help fund essential public services and infrastructure, and we well understand its challenges.”
“We believe Ukraine’s financial troubles can be resolved for all parties without creditors immediately writing down the value of their bonds,” Hassenstab wrote.
Hasenstab is taking what, from his perspective and that of many finance professionals, is a reasonable position. He wants the money Ukraine promised to pay back. And he’s given countries like Ireland, Poland, and Hungary, all close to financial ruin, a much-needed financial shot-in-the-arm that helped stabilize their economies.
“He’s a brilliant guy,” said Alex Petrovic, a financial planner in Kansas City, Mo., who has his client’s money in Franklin Templeton funds. “He has a long history of making good bets, and this long history is excellent. We have confidence in him. ”
Ukraine insists Hasenstab and its other creditors have to recognize Kiev is not in a position to pay its debts.