Ukraine Fails to Reach Agreement with Creditors on Debt Restructuring

The Ukrainian Finance Ministry has failed to reach an agreement with the holders of Ukrainian Eurobonds after the first official talks on the restructuring of international debts worth over $20bn. Creditors opposed Kyiv’s proposal for partial debt cancellation. Payments on the bonds will resume on 1 August. Ukraine asked the debt holders to accept larger losses to finance the country’s military defense and prepare resources for economic recovery after the conflict. However, they rejected Kyiv’s proposal to lower the value of foreign currency bonds by 60% and offered 22%. “As the deadline approaches, we must encourage our bondholders to continue productive and good faith negotiations, with more substantial debt relief to be reflected in their proposals in line with IMF parameters and the current macro-financial situation in Ukraine,” the agency quoted Ukrainian Finance Minister Serhiy Marchenko as saying. Negotiations between Ukraine and a group of bondholders, according to Bloomberg, started a fortnight ago. The creditors said they were ready to conclude the deal. At the same time, according to the agency, they believe that the proposed government deal “significantly exceeds market expectations.” The Ukrainian authorities offered to exchange the bonds for new ones maturing in 2040 and paying between 1% and 6%. After the outbreak of the conflict in Ukraine, Ukraine’s private creditors allowed the country to suspend state debt payments. The Wall Street Journal wrote in May that creditors intend to resume payments in 2025.