The Group of Creditors of Ukraine welcomes the agreement in principle reached between Ukraine and the special committee of creditors regarding the terms of debt restructuring for Eurobonds, the message says on the website of the Ministry of Finance of Canada.
“The Group confirms that it is comfortable with the agreement, which has been confirmed by IMF staff as being compatible with the objectives of ensuring an acceptable level of debt for Ukraine under the EFF Extended Financing Program, in accordance with the basic macroeconomic framework of the fourth review of June 28, 2024, taking into account the overall strategy restructuring of power,” the release reads.
It emphasizes that the principle of comparability of the restructuring scheme must be respected when the Group restructures its debt in 2027.
Official creditors urged the owners of Eurobonds to quickly agree to Ukraine’s offer to exchange for new bonds within the framework of the restructuring, officially published on August 9.
“The quick implementation of the exchange will demonstrate the substantial support of the government and the people of Ukraine, and thereby provide a significant relief of the debt burden,” the Group of Creditors of Ukraine emphasized.
In conclusion, she noted that she will continue close coordination and assessment of the situation with the support of the IMF and the World Bank.
The Group of Creditors of Ukraine includes Canada, France, Germany, Japan, Great Britain and the USA. Observers in the Group are Australia, Austria, Belgium, Brazil, Denmark, Finland, Ireland, Israel, Italy, Korea, the Netherlands, Norway, Spain, Sweden and Switzerland.
As reported, Ukraine announced on July 22 that it had reached an agreement in principle regarding the restructuring of Eurobond debt in the amount of about $23 billion with a special committee of the owners of these Eurobonds.
The arrangements provide for the write-off of 37% of the debt with the possibility of recovery of 12% in case of reaching a certain level of GDP in 2028.
The rest of the debt will be covered by new Eurobonds maturing in 2029-2036, the interest on which will gradually increase from 1.75% in the coming years to 7.75% at the end of the term. A fee of 1.25% of the amount of Eurobonds exchanged will be paid for participation in such an exchange.
Ukraine had initially expected to be able to complete all negotiations with bondholders by August 1, when the Eurobond payments are due under the terms of the 2022 restructuring. However, as of August 1, the government temporarily imposed a moratorium on Eurobond payments for the restructuring period.
According to the conditions published on August 9, applications for participation in the exchange are accepted until August 27 inclusive, the results are announced on August 28, and all calculations take place on August 30 and in the following five days.
In order for the transaction to take place, the consent of 2/3 of the holders of all securities and at least half of the holders of each of the issues will be sufficient, provided that less than a quarter of the holders of each issue are against such transaction.
