Ukraine Has Not Reached an Agreement on the Restructuring of GDP-Linked Bonds
Representatives of Ukraine have not yet been able to agree on the terms of restructuring the state debt related to the issuance of GDP-linked bonds. This has been reported by international media and confirmed by an official statement from the Ukrainian government published on the Euronext exchange website on April 24. According to the information, the Ukrainian authorities held a meeting with several representatives of the committee of bondholders, whose total is over 3.23 billion dollars, linked to the country’s GDP.
This is reported by AgroReview
Bondholders have stated that they cannot accept Ukraine’s proposal for restructuring and have submitted their counterproposal. In response, the Ukrainian government stated:
“Ukraine noted that it cannot accept the proposal of the limited owners and has refused further negotiations until the end of the Limited Period. At the same time, the country intends to continue dialogue with the holders of GDP-linked bonds and consider all possible solutions”
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Ukraine’s International Debt Obligations and Restructuring Prospects
According to reports from the Financial Times, Kyiv is expected to pay about 600 million dollars in debt obligations in May or declare a default. Finance Minister Serhiy Marchenko emphasized the scale of economic losses caused by Russian aggression in a comment on the Euronext exchange. He stated:
“Economic losses are already estimated in the hundreds of billions of euros, and the destruction of infrastructure across the country is extensive. According to World Bank estimates, the costs of recovery could exceed 500 billion euros over the next decade. For stable reconstruction, it is important to ensure Ukraine’s financial sustainability and debt capacity”
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According to Marchenko, GDP-linked bonds were created for an economic reality that no longer exists and should not hinder the country’s recovery. They should be subject to a fair and comprehensive solution. The meeting with representatives of GDP-linked bondholders, which took place from April 15 to 23, involved about 30% of the holders of these securities, and Ukraine proposed to exchange the bonds for additional issues of eurobonds or to change the terms of their issuance.
For their part, committee representatives proposed that Ukraine pay 75% of the May payment for the bonds and issue new bonds with a rate of 7.75% totaling 209 million dollars, maturing in February 2029. Ukraine rejected this proposal. The Finance Minister added:
“We remain open to constructive dialogue with all holders of GDP-linked bonds to seek long-term solutions that will contribute to financial stability and the recovery of the country”
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The IMF Executive Board on March 28 made a decision to complete the seventh review of the extended funding mechanism for Ukraine, which will allow for an additional 0.4 billion dollars to support the budget. The total amount of funding under the program will reach 10.1 billion dollars.