Morgan Stanley made the announcement on Wednesday That UkraineRussia’s economy could shrink by up to 60% a year in 2022 in the event of a “protracted conflict without a clear solution” following the aggression.
The bank considers this to be the worst case scenario, which includes Ukraine South is losing access to the Black Sea. The bank’s base case scenario is the 39% GDP contraction in 2022, which is the cause of the protracted conflict “with fading intensity”.
“While a major decline in imports should limit the deterioration of the external balance sheet, financial and more broad-based funding demand is a major challenge,” economists Morgan Stanley wrote in a note.
UkraineIts sovereign international bonds are currently pricing with a “light” debt restructuring, with all payments cleared by 2026 but no haircuts, a conservative exit yield of 14%, the note added.
On wednesday UkraineThe outstanding $ 1 billion bond was traded just under 70 cents in September 2022 while most of the remaining issues were bid between 34 cents and 47 cents, according to refinitive data.
Morgan sees Stanley Ukraine The financial needs of 4.7 billion per month and how the country will use international aid for reconstruction will play an important role in the long-term outlook of the economy.