Ukraine remains committed to negotiations with GDP warrant holders to find a solution, the Ministry of Finance said after announcing that Ukraine had failed to reach an agreement on the restructuring of $2.6 billion in debt, UNN writes.
Ukraine remains committed to holding constructive negotiations with all GDP warrant holders in order to find a solution that ensures long-term debt sustainability, without creating a threat to the country's reconstruction and recovery
Context
On April 24, the Ministry of Finance announced that from April 15 to 23, Ukraine held a meeting with members of the Special Committee, which includes institutional investors - holders of about 30% of Ukraine's GDP warrants, at which it presented proposals for the restructuring of GDP warrants. This proposal is formed in accordance with the parameters of the IMF program in order to restore debt sustainability and is consistent with the principle of Comparability of Treatment of the Group of Official Creditors of Ukraine.
Ukraine offered GDP warrant holders two options:
- Exchange of warrants for an additional issue of eurobonds, which were issued as part of the restructuring in 2024. According to this option, investors will receive the same set of A and B bonds as the eurobond holders last year, in the ratio: for each 1 unit of warrants - 1.35 units of bonds.
- The second option involves changing the terms of issue of GDP warrants as follows:
- payments for 2025-2028 are cancelled;
- the possibility to redeem/cancel GDP warrants will be extended until May 2029, while the redemption price will progressively increase from 85 in 2026 to 100 cents in 2029;
- the restructured warrants (with payments in 2029-2041) will have the same characteristics as the current warrants, except for the redemption option;
- holders will receive 36.6 cents of Bond A and Bond B for every 100 cents of warrants.
The Ministry of Finance stressed that both options are part of a single Exchange Offer and a request to change the terms of circulation (Consent Solicitation). Investors, as stated, "can choose any of the proposed options", and participation in one of them will be considered support for the restructuring of the terms of issue of warrants. The Ministry of Finance called this approach important, given the different possible priorities of different GDP warrant holders and the need to obtain the consent of 75% of holders for the aggregate nominal value of GDP warrants from those present at the quorum meeting of warrant holders.
The Special Committee, in turn, reportedly stated that it brings together holders of more than 30% of the warrants and offered Ukraine to pay 75% of the payment due in May this year to warrant holders for GDP growth in 2023 and to issue new C bonds with a rate of 7.75% in the amount of $209 million with maturity in February 2029. "Ukraine rejected this proposal," the Ministry of Finance said.
Minister's comment
GDP warrants were created for an economic reality that no longer exists
According to him, moderate GDP growth of Ukraine in 2023 does not indicate economic prosperity - it is only a fragile recovery after a nearly 30% drop caused by the full-scale war of the Russian Federation against Ukraine.
These instruments should not stand in the way of our recovery. Our goal is to find a fair and comprehensive solution to this issue. We remain committed to constructive dialogue with investors - just as we did during the successful negotiations on the restructuring of Eurobonds last summer. We strive to reach a mutually beneficial solution that will contribute to the long-term financial stability of Ukraine and strengthen investor confidence
What investors say
As Reuters writes, debt holders said that Ukraine's proposal "has no prospect of approval" and "is not the basis for a viable point of interaction."
They also stated their readiness to continue the dialogue and outlined their rejected proposal for the next debt payment - Ukraine must pay $406 million in cash plus $209 million in the form of new bonds.
Reuters calls debt restructuring a condition of the IMF program.