Ukraine seeking approval to defer Eurobonds payments

20 July, 05:21 PM
Ukraine’s Finance Minister Serhiy Marchenko (Photo:NV)

Ukraine’s Finance Minister Serhiy Marchenko (Photo:NV)

Kyiv wants to agree on a two-year postponement of interest payments and repayments with the owners of Ukrainian eurobonds by August 15, as per the resolution of the Cabinet of Ministers No. 805 dated July 19.

The Government of Ukraine intends to extend the term of circulation of all Eurobonds for 24 months, as well as postpone the payment of interest on them for the same period.

"Agreements on the state debt in 2022 are carried out until August 15, 2022, by including in the conditions the bond issuance... with the consent of the bondholders..." the document reads.

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According to the resolution, the final maturity date of each bond (and in the case of 2017 bonds — each maturity date of part of the 2017 bonds) would be postponed for a period of 24 months from the corresponding final maturity date of the bonds."

During these 24 months, interest on the bonds will continue to accrue at the existing rate, and additional interest will be accrued at the same rate on top of the accrued principal interest.

"At any time during the said deferral, the total amount of the accrued basic interest and additional interest (the amount of income of the holders) on the basis of a separate decision of the Cabinet of Ministers of Ukraine may be paid to the owners of the bonds in part (or) in full," the document reads.

At the end of the specified deferment, the amount of income due to the holders not paid at that time can be paid to the holders in full or by additional issuance of the corresponding bonds.

“The amount of income of the holders is calculated by the Ministry of Finance taking into account, in particular, the information provided by business entities engaged by the Ministry of Finance to provide agency, consulting or other services in connection with the agreements, and cannot exceed $3,000 million (in total for all bonds, which are payable in US dollars) and 300 million euros (in total for all those payable in euros)," says the resolution.

Earlier, UK business news outlet the Financial Times, as well as Ukrainian business news outlet Economic Pravda, reported that the Ministry of Finance of Ukraine will ask foreign private creditors to agree to a postponement of debt payments on July 20. This will be a turning point for Kyiv, which since the beginning of the war insisted on the complete fulfillment of its obligations.

Earlier, the International Monetary Fund noted that Ukraine is "neatly" servicing its foreign debt, and the country does not need payment deferrals. The Fund also called on the international community support the country with grant funding.

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