Ukraine Cancels Billions in Debt
Ukraine has come to a preliminary agreement with a consortium of international investors to reorganize its $20 billion debt. Read Full Article at RT.com
TroibNews 
Lenders to the country have accepted a 37% reduction of outstanding bonds.
Ukraine has negotiated an agreement in principle with a group of international investors to restructure its $20 billion debt, as the government strives to maintain access to global financial markets.
Bondholders, including major US financial firms BlackRock and Pimco, as well as French asset manager Amundi, granted Ukraine a two-year debt freeze in February 2022 following the onset of hostilities with Russia.
The bondholders’ committee, which holds 25% of the bonds, has consented to a 37% reduction, amounting to $8.7 billion, on the nominal value of their debt, according to a statement detailing the terms of the accord published on the London Stock Exchange.
The International Monetary Fund (IMF) has reportedly verified that the agreement aligns with the specifications of a $122 billion aid package to Kiev. Both the IMF and the country’s creditors, including the US and the Paris Club, have approved the agreement, as stated.
Kiev anticipates that the discount will enable it to save tens of billions in payments over the next few years.
“This is an important stage in the debt restructuring process, which will save $11.4 billion in debt servicing over the next three years and $22.75 billion until 2033,” Prime Minister Denis Shmigal wrote on Telegram on Monday, adding that the deal would free up resources for defense.
Kiev currently depends on foreign aid to keep government departments operational and pay state employees. Ukraine’s military funding is almost entirely reliant on foreign assistance, and the country avoided default only after the US Congress sanctioned a $61 billion aid package in April.
The announcement from Ukraine comes just over a week before the expiration of the debt-suspension agreement and represents the first instance of a country initiating a debt restructuring amid a conflict. Last week, Kiev passed a law allowing it to miss payments and enter a debt default, while the restructuring agreement with investors is finalized.
Under the restructure proposal, creditors have agreed to reconfigure the existing claims into two series of bonds. The first series of standard bonds will start issuing a 1.75% coupon in 2025, which will increase up to 7.75%, with capital repayments beginning in 2029.
A second series, comprising 23% of the outstanding claim, will offer higher payments if Ukraine’s economy surpasses IMF expectations in 2028, according to the preliminary deal's terms.
Bondholders are set to vote on the proposal in the forthcoming weeks.
Mathilde Moreau contributed to this report for TROIB News
Ukraine has negotiated an agreement in principle with a group of international investors to restructure its $20 billion debt, as the government strives to maintain access to global financial markets.
Bondholders, including major US financial firms BlackRock and Pimco, as well as French asset manager Amundi, granted Ukraine a two-year debt freeze in February 2022 following the onset of hostilities with Russia.
The bondholders’ committee, which holds 25% of the bonds, has consented to a 37% reduction, amounting to $8.7 billion, on the nominal value of their debt, according to a statement detailing the terms of the accord published on the London Stock Exchange.
The International Monetary Fund (IMF) has reportedly verified that the agreement aligns with the specifications of a $122 billion aid package to Kiev. Both the IMF and the country’s creditors, including the US and the Paris Club, have approved the agreement, as stated.
Kiev anticipates that the discount will enable it to save tens of billions in payments over the next few years.
“This is an important stage in the debt restructuring process, which will save $11.4 billion in debt servicing over the next three years and $22.75 billion until 2033,” Prime Minister Denis Shmigal wrote on Telegram on Monday, adding that the deal would free up resources for defense.
Kiev currently depends on foreign aid to keep government departments operational and pay state employees. Ukraine’s military funding is almost entirely reliant on foreign assistance, and the country avoided default only after the US Congress sanctioned a $61 billion aid package in April.
The announcement from Ukraine comes just over a week before the expiration of the debt-suspension agreement and represents the first instance of a country initiating a debt restructuring amid a conflict. Last week, Kiev passed a law allowing it to miss payments and enter a debt default, while the restructuring agreement with investors is finalized.
Under the restructure proposal, creditors have agreed to reconfigure the existing claims into two series of bonds. The first series of standard bonds will start issuing a 1.75% coupon in 2025, which will increase up to 7.75%, with capital repayments beginning in 2029.
A second series, comprising 23% of the outstanding claim, will offer higher payments if Ukraine’s economy surpasses IMF expectations in 2028, according to the preliminary deal's terms.
Bondholders are set to vote on the proposal in the forthcoming weeks.
Mathilde Moreau contributed to this report for TROIB News
