Ukraine appeals to bondholders for $20 billion debt reduction

    WORLD  17 June 2024 - 20:02

    Ukraine urged international bondholders to accept deep cuts on the value of more than $20 billion in debt in order to help finance the nation’s war effort, after initial talks just months before a payment standstill expires failed to produce a deal.

    Bondholders turned down a proposal by Ukraine to reduce the value of foreign currency bonds by up to 60 per cent in negotiations this month, the country’s finance ministry said on June 17, The Financial Times reports.

    Volodymyr Zelenskyy’s government is facing a tight deadline to secure the debt restructuring, which it needs in order to continue receiving a bailout from the IMF and to restore flows of private funding for reconstruction.

    Bondholders granted Ukraine a two-year moratorium on payments in the months following Russia’s invasion in early 2022, but this is set to run out in August. The early talks on a restructuring have reflected deep investor uncertainty about the course of the war and how much debt Ukraine’s economy will be able to carry.

    An investor committee representing about 20 per cent of the bonds proposed cuts of just over 22 per cent, but the IMF said this would fail key debt targets, the finance ministry said.

    “Strong armies must be underpinned by strong economies to win wars,” said Sergii Marchenko, Ukraine’s finance minister. “As we approach the deadline, we must urge our bondholders to continue productive and good-faith negotiations, with more substantial debt relief” that can meet IMF targets.

    The bondholder committee said on June 17 that it was “committed to working with Ukraine to structure a transaction which may attract the requisite support from market participants”.

    But it warned that Ukraine’s proposed haircut “was significantly in excess of market expectation” and “would risk substantial damage to Ukraine’s future investor base”.

    Ukraine is looking for just over $5 billion in debt relief from bondholders in the next year alone, when it expects to run a budget deficit of around $43 billion to finance the war. This will be partly underwritten by $5.4 billion in further IMF loans, and more than $28 billion in other official support.

    The finance ministry said on Monday that official creditors — a group that includes the US, UK, Japan and other governments that have financially backed Ukraine — had told bondholders they should receive only “symbolic” payments up to 2027.

    As a replacement for the old debt, Ukraine has proposed a mixture of bonds that will pay symbolic interest until 2027 — initially 1 per cent before rising to 3 per cent — and securities that would pay out more if Ukraine beats tax revenue targets in the next two years.

    If they perform, these securities could reduce the losses that bondholders take to about one-quarter over time, the Ukrainian finance ministry said. 

    However, the creditor committee has proposed debt that would pay at least 7.25 per cent in the next few years as well as a “recovery bond” that would initially pay low coupons before raising them if the economy outperforms expectations.

    Talks would continue and “we are confident that a satisfactory restructuring agreement can be reached in the upcoming weeks and before the current payment freeze expires”, Marchenko said.

    Caliber.Az

    Subscribe to our Telegram channel


Read also

Cybersecurity challenges and opportunities in a net-zero world Caliber.Az on YouTube

23 July 2024 - 17:10

Russia expands sanctions on UK officials in tit-for-tat move

23 July 2024 - 17:34

VP Harris raises $100 million in first 24 hours of US presidential campaign

23 July 2024 - 17:46

US pro-Armenian senator faces possible expulsion Senate Ethics Committee dealing with Menendez case

23 July 2024 - 14:25

Russia emphasises support for improving Türkiye-Syria relations

23 July 2024 - 18:22

Analysts: EU may pursue Ukraine peace talks if Trump wins US election

23 July 2024 - 16:22
ADVERTS
Video
Latest news

    Russia emphasises support for improving Türkiye-Syria relations

    23 July 2024 - 18:22

    PKK/YPG's election efforts face US pressure and Turkish resistance

    Report of Center for Strategic Studies

    23 July 2024 - 18:10

    Azerbaijan unveils documentary on Western Azerbaijan's material and cultural heritage

    PHOTO

    23 July 2024 - 18:01

    Russo–Ukraine war: Black Sea battle scene

    Asymmetric warfare

    23 July 2024 - 17:58

    VP Harris raises $100 million in first 24 hours of US presidential campaign

    23 July 2024 - 17:46

    Russia expands sanctions on UK officials in tit-for-tat move

    23 July 2024 - 17:34

    Türkiye discovers significant arsenal during Operation Claw-Lock in Iraq

    VIDEO

    23 July 2024 - 17:22

    Cybersecurity challenges and opportunities in a net-zero world

    Caliber.Az on YouTube

    23 July 2024 - 17:10

    Azerbaijan excludes PACE from parliamentary election observation

    23 July 2024 - 16:58

    Armenia may resume criminal case against ex-president

    23 July 2024 - 16:46

    Azerbaijan, Russia discuss situation in South Caucasus

    23 July 2024 - 16:34

    Analysts: EU may pursue Ukraine peace talks if Trump wins US election

    23 July 2024 - 16:22

    US pledges security support to Armenia

    23 July 2024 - 16:10

    Hundreds of foreign companies seek participation in Karabakh projects

    23 July 2024 - 15:58

    Demographic realities: What lies ahead for the world and the South Caucasus?

    Analysis

    23 July 2024 - 15:51

    Azerbaijani MFA congratulates Egypt on national holiday

    23 July 2024 - 15:46

    Azerbaijan, Kazakhstan to finalize military intelligence cooperation agreement

    23 July 2024 - 15:34

    US State Department highlights Azerbaijan's leadership in alternative energy

    23 July 2024 - 15:22

    Governor: Ukrainian drone attack hits ferry in Russia’s Krasnodar

    23 July 2024 - 15:11

    Türkiye neutralises four PKK terrorists in northern Iraq

    VIDEO

    23 July 2024 - 14:58

    Georgia’s cautious diplomacy vs. Armenia’s risky manoeuvres

    "Better safe than sorry"

    23 July 2024 - 14:46

    European official slams Kamala Harris as “invisible” in hot mic moment

    23 July 2024 - 14:34

    US pro-Armenian senator faces possible expulsion

    Senate Ethics Committee dealing with Menendez case

    23 July 2024 - 14:25

    EU’s sanctimonious move: €10m won’t be silver bullet for Armenia

    Yet the devil in disguise tempted it

    23 July 2024 - 14:22

    Georgia investigates terrorist attack plot against ruling party's chairman

    23 July 2024 - 14:10

    Türkiye successfully tests Bayraktar KIZILELMA-3 unmanned fighter jet

    VIDEO

    23 July 2024 - 13:58

    Bloomberg: Slovakia not responsible for fate of sold shells

    23 July 2024 - 13:46

    Fire engulfs fiber and paper factories in Türkiye’s Bursa

    VIDEO

    23 July 2024 - 13:37

    Turkish MFA refutes claims of Erdogan-Assad meeting in Moscow

    23 July 2024 - 13:34

    Paris 2024 Olympics: Airport strike looms on opening day

    23 July 2024 - 13:22

    Azerbaijan invites reps of 20 international organisations to observe parliamentary elections

    23 July 2024 - 13:18

    Azerbaijani envoy engages in high-level talks with Iranian officials

    PHOTO

    23 July 2024 - 13:10

    Chinese military delegation visits Azerbaijan's National Defence University

    PHOTO

    23 July 2024 - 12:58

    Azerbaijan and Türkiye - Pakistan's main geopolitical allies

    Article by Arab News PK

    23 July 2024 - 12:47

    Russia, Iran finalise comprehensive strategic partnership agreement

    23 July 2024 - 12:46

    Azerbaijani snipers enhance firearms training skills in recent course

    PHOTO

    23 July 2024 - 12:34

    How the US is provoking conflict in the South Caucasus?

    Armenia’s proxy status

    23 July 2024 - 12:22

    Latvia dispatches 500 drones to Ukraine amid expanded support

    23 July 2024 - 12:10

    Ambassador: Kazakhstan to play key role at COP29 in Baku

    23 July 2024 - 11:58

    President Aliyev sends warmest wishes to Egypt on Revolution Day

    23 July 2024 - 11:46

All news