(Adds Ukraine bond price, other investors, paragraphs 5-6)
By Tim McLaughlin and Ross Kerber
BOSTON, April 9 Templeton Global Bond Fund
manager Michael Hasenstab, who has a multibillion-dollar bet on
Ukraine bonds, says he is confident the country can flourish
over the next decade and that the international community can
put together a reform package to solve any short-term liquidity
and solvency issues.
"I think the current government has done an exceptional job
of tackling not just the short-term issues but really setting
the stage for Ukraine to flourish over the next five to 10 years
by putting in place very difficult, but very important
structural reforms," Hasenstab said in remarks released on
Hasenstab's statements, which appeared in a video of him
visiting Kiev, were his first extended commentary on Ukraine
since the country plunged into crisis.
The $69 billion Templeton Global Bond Fund, which
Hasenstab runs for Franklin Resources Inc, held $3.1
billion worth of Ukraine bonds at the end of 2013. He showed no
signs of backing away from that big bet.
The yield on Ukraine's 2023 bonds has risen in the past week
to more than 9 percent amid growing uncertainty. The price of
the bonds has fallen during that time to 88 cents from 93 cents
on April 4, according to Reuters data. Bond prices move
inversely to yields.
Franklin Templeton funds are the largest holder of that
$1.25 billion bond issue, according to Reuters data. Other major
holders of the 2023 bonds include funds run by Boston's Fidelity
Investments, BlackRock Inc and AllianceBernstein LP
Last week, Moody's Investors Service downgraded Ukraine's
outlook to negative, citing the country's escalating political
crisis and its stressed liquidity position after Russia withdrew
A video recorded on April 5 shows Hasenstab wearing jeans
and a dark overcoat while walking in Kiev.
"Certainly there is a crisis," Hasenstab said in the video,
which was confirmed by Franklin Resources. "One only has to walk
500 yards to the left here and see the square and see the
evidence of the challenges that this country has faced."
Hasenstab further talked about how he has been encouraged by
the international community's response to Ukraine's crisis.
"There has been a very cooperative and proactive
relationship that has brought together the U.S., Europe, the
(International Monetary Fund) and the World Bank in a very close
dialog to come up with a reform package that has the potential
to ensure both the long-term success as well as the short-term
solvency or short-term liquidity issues," Hasenstab said.
Last month, the EU said it was willing to provide $15
billion in loans and grants to Ukraine over the next several
years. The International Monetary Fund announced a $14 billion
to $18 billion loan for Kiev in return for tough economic
Hasenstab is a contrarian bond fund investor who has taken
big bets on Ireland and Hungary, for example. He oversees a team
that manages about $180 billion in total bond fund assets. The
Templeton Global Bond Fund is the No. 2 U.S. actively managed
bond fund behind the Pimco Total Return Fund.
Meanwhile, the tension in Ukraine remains high.
Pro-Russian protesters have seized control of public
buildings in two eastern Ukrainian cities, leading to a war of
words between Russia on one side and Ukraine and the West on the
other. The takeovers intensified fears of Russian military
intervention and further western sanctions against Russia.
(Reporting By Tim McLaughlin; Editing by Steve Orlosky; Chris
Reese and Tom Brown)