Ukraine failed to reach an agreement with bondholders to restructure about $20 billion of international debt during official negotiations.
This is stated in the statement of Ukraine published on the London Stock Exchange.
From June 3 to 14, Ukraine held closed meetings with representatives of the Eurobond Owners Committee, which includes large institutional and other long-term investors who own about 20% of Ukraineʼs Eurobonds.
The meetings discussed the terms of the restructuring of 13 series of Eurobonds of Ukraine, which should take place by August 1, 2024, in order to maintain access to international markets, while satisfying the requirements of the International Monetary Fund (IMF) regarding restructuring.
However, there were major differences between the governmentʼs proposal and the bondholdersʼ counterproposal for restructuring.
Ukraine offered to exchange all 13 series of Eurobonds either for a series of fixed income instruments (simple bonds) and government derivatives, or only for a series of simple bonds.
Bondholders said the Ukrainian governmentʼs offer called for a debt write-off that "significantly exceeded market expectations," Reuters writes. They also believe that this proposal "causes significant damage to the future investor base of Ukraine and the main goal of returning access to capital markets at the first opportunity."
Minister of Finance of Ukraine Serhii Marchenko said that without restructuring, Ukraine will not be able to sufficiently finance its defense and start a recovery and reconstruction program.
According to him, the proposals of Eurobond owners should reflect a more significant debt reduction in accordance with the parameters of the IMF and the current macro-financial situation in Ukraine.
"We will continue productive negotiations with investors to settle all existing differences. We are confident that an agreement on restructuring can be reached in the coming weeks, before the end of the current moratorium on payments," he added.
- In August 2022, the owners of Eurobonds agreed to a two-year postponement of payments and their repayment terms. Ukraine has reached such an agreement regarding almost 75% of the total principal amount of securities in circulation. Most of Ukraineʼs creditors have suspended payment obligations until 2027.
- In October 2023, Reuters reported that Ukraine was discussing plans to restructure its $20 billion debt with foreign bondholders and the possibility of raising new financing.
- In May, The Wall Street Journal wrote that foreign creditors of Ukraine want to resume payments on the national debt as early as 2025.