Ukraine urges bondholders to accept markdown on more than $20bn of debt - FT

Ukraine has called on international bondholders to agree to a significant reduction in its more than $20 billion debt to help the country, after initial talks just months before the moratorium on payments expired failed to reach a deal, the Financial Times reports, UNN writes.

Details

Bondholders have rejected Ukraine's offer to reduce the cost of foreign currency bonds by up to 60 percent at talks this month, the Finance Ministry said Monday.

The government of Ukraine, as noted, faced a tight timeline to secure the debt restructuring necessary to continue receiving IMF assistance and to restore private financing flows for recovery.

Bondholders had agreed to a two-year moratorium on repayments for Ukraine after the Russian invasion in early 2022, but it expires in August. "The first negotiations on the restructuring reflected deep investor uncertainty about the course of the war and how much debt Ukraine's economy can sustain," the newspaper writes.

"The investor committee, which represents about 20 percent of the bonds, proposed a cut of just over 22 percent, but the IMF said it would not meet key debt targets," the Finance Ministry said.

"Strong armies must be supported by a strong economy to win wars," said Ukraine's Finance Minister Sergiy Marchenko. - "As we approach the deadline, we must encourage our bondholders to continue productive and good faith negotiations with more significant debt relief" that could lead to the IMF's goals.

The bondholders' committee reportedly said on Monday that it is "committed to working with Ukraine to structure a deal that can attract the necessary support from market participants.

But he warned that Ukraine's proposed cuts "significantly exceed market expectations" and "threaten to significantly damage Ukraine's future investor base.

Addendum

In March, Ukraine and the United States signed a bilateral agreement to postpone public debt payments.