KYIV, August 2 ------ Ukraine's President Volodymyr Zelensky has signed a law allowing the government to suspend foreign debt payments until Oct. 1, paving the way for a moratorium to be called that would formally mark a sovereign default. Earlier this month, Ukraine announced a preliminary deal with a committee of its main bondholders to restructure its near $20 billion worth of international debt. Prompted by Russia's 2022 full-scale invasion, it will be its second such rework in a decade following a similar deal after the 2014 invasion of Crimea.
Bondholders still must approve the deal, which they are expected to do, though the technicalities behind it could take weeks. But a short-term default would have a less significant impact on its long-term borrowing prospects than a default with no deal in sight. The proposal would see a 37% nominal haircut on Ukraine's outstanding international bonds, saving Kyiv $11.4 billion in payments over the next three years - the duration of the country's programme with the International Monetary Fund, according to government statements. Ukraine also owes a $34 million coupon payment on its 2026 Eurobond due on Aug. 1, with a 10-day grace period.
Ukraine's finance minister Sehriy Marchenko earlier hailed the deal with bondholders. But he also told RBC-Ukraine outlet that the negotiations were not easy, citing "significant differences" in the assessment of the situation Ukraine finds itself in.
Source: reuters.com
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