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Ukraine has reached an important agreement in principle with some private creditors to restructure more than $20 billion of international debt, which will avoid default. According to Bloomberg, the committee of bondholders agreed to nominal losses of 37% of their assets on 13 bonds, giving up claims in the amount of $8.67 billion.
Ukraine expects to save $11.4 billion over the next three years through a combination of lower coupons and longer maturities. Minister of Finance of Ukraine Serhiy Marchenko noted that this will allow Ukraine to return to the market as soon as possible after the stabilization of the security situation, which will help finance the rapid recovery and reconstruction of the country.
The agreement in principle was reached with a committee of creditors that included Amundi SA, BlackRock Inc and Amia Capital LLP, as well as other investors that together represent about 25% of the bonds. The approval of at least two-thirds of all bondholders is required to complete the debt restructuring deal.
According to Interfax-Ukraine, Ukraine’s principal agreements with the special committee of owners of Eurobonds in the amount of about $20 billion provide for the replacement of 40% of their total amount plus accrued interest with four issues of Eurobonds (A bonds) maturing in 2029–2036 and 23% with four special issues bonds (B bonds) maturing in 2030-2036, part of which will be issued only when the required level of GDP is reached in 2028.
According to the notification of the Government of Ukraine on the Irish Stock Exchange, a fee of 1.25% of the amount of convertible Eurobonds will be paid for participation in such an exchange. The Committee of Creditors represents the holders of about 25% of Eurobonds.
Eurobonds of Ukravtodor for $700 million are also included in the agreement. “We are restoring debt sustainability. Today, we reached an agreement in principle with the Committee of Eurobond Owners of Ukraine. This is an important stage in the process of restructuring the debt, which will save $11.4 billion on debt servicing over the next three years and $22.75 billion by 2033,” Prime Minister Denys Shmyhal said in Telegram.
According to him, this will allow Ukraine to free up resources for urgent needs: defense, social protection and reconstruction.
It was previously reported that Ukraine imposed a freeze on foreign debt payments two years ago after the start of a full-scale Russian invasion. This freeze ends on August 1, and the government in Kyiv must restructure its debt in accordance with the requirements of the International Monetary Fund as part of a $15.6 billion program. According to the statement, both the IMF and the country’s bilateral creditors, including the United States and the Paris Club, have approved Ukraine’s proposals .
