Ukraine has reached an agreement with bondholders to restructure $20 billion of debt: Bloomberg has details
Kyiv • UNN
Ukraine has agreed with private creditors to restructure $20 billion of its debt. The agreement provides for the write-off of 37% of the debt and will save $11.4 billion over three years.
Ukraine has reached an agreement in principle with some of its private creditors - bondholders - to restructure more than $20 billion in international debt, Bloomberg reports, providing details of the deal, UNN writes.
Details
"The government debt was trading at its highest level in two years, demonstrating investor optimism that the initial deal will receive final approval from stakeholders. According to a statement on the terms of the deal, the Bondholders' Committee recognized nominal losses of 37% of its assets on 13 bonds, waiving claims worth $8.67 billion. Ukraine expects to save $11.4 billion over the next three years through a combination of lower coupons and maturity extensions," the newspaper writes.
"The completion of this restructuring agreement will create the conditions for Ukraine's early return to the international capital market when the security situation stabilizes to finance the rapid recovery and reconstruction of our country," the Ministry of Finance of Ukraine said in a separate statement.
Ukraine's dollar-denominated bonds rose across the curve after the announcement of the deal and were the top emerging market gainers of the day. The note maturing in March 2035 added more than 5 cents to the dollar to about 33 cents as of 11:48 a.m. in London.
"As long-term investors in Ukraine, we welcome the opportunity to provide significant debt relief to Ukraine, to assist its efforts to regain access to international capital markets, and to support the country's future recovery for the benefit of the Ukrainian people," the ad hoc committee of creditors said in a separate statement.
The agreement in principle was reportedly reached with a committee of creditors that includes Amundi SA, BlackRock Inc and Amia Capital LLP, as well as other investors, which together represent about 25% of the bonds. At least two-thirds of all bondholders must approve the deal to complete the debt restructuring.
"I think they'll get the number of votes they need," said Victor Sabo, emerging markets fund manager at Abrdn Plc, which owns Ukraine's sovereign bonds. The government came closer to the original bondholders' proposal in terms of replacement value than expected, Mr. Sabo added.
"The government and creditors have agreed to restructure the claims into two sets - A bonds and B bonds - a similar structure used in the restructuring of Zambia's debt," the publication writes.
The step-up coupon payments on the new bonds issued under the A bonds will start in 2025 at 1.75% and reach 7.75%, while capital payments will begin in 2029, the publication says.
Reportedly, "no agreement has been reached on the warrants, although the government will continue negotiations with the holders."
Addendum
Ukraine's first round of negotiations with international investors in June failed to yield results. This month, the Verkhovna Rada approved a new law that allows the government to impose a temporary ban on foreign debt payments until October.
The legislation provided flexibility before the agreement in principle with creditors, according to the Ministry of Finance.
