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MOSCOW, January 14. /TASS/. Moscow does not want Ukraine to default, but has all legal grounds to demand Kiev’s early $3 billion bond repayment and will make a decision on the issue in the nearest future, Russian Prime Minister Dmitry Medvedev said on Wednesday.
Addressing the Gaidar economic forum, Medevdev said that one of the provisions for the extended bond to Ukraine stipulated the ratio requirement for the country’s state debt to its GDP and the “provision has been breached as of today.”
“That is why no matter what the Ukrainian authorities say, we have all legal grounds to demand early debt repayment, in other words to seek Ukraine’s implementation of its international obligations,” Medvedev said.
The Ukrainian Eurobond issue prospectus includes covenants stipulating that Ukraine should meet all obligations on its sovereign debt on time. One covenant says the Ukrainian government should not allow its debt-to-GDP ratio to rise above 60%
Medvedev said that Ukraine’s recently approved budget did not stipulate any funds for Euro bond repayment to Russia, “although Kiev has set aside funds for debt repayment to other creditors.”
“I want the Ukrainian authorities and the Russian Finance Ministry to pay close attention to this fact,” Medvedev said.
The Russian premier said that Russia does not “want Ukraine to default and its already disastrous economic situation to deteriorate further.”
“On the contrary, we need a living partner. However, debts must be repaid. Both state and corporate debts. That is why the decision [on the debt] will be made in the nearest future,” the Russian premier added.
Russia made a decision in late 2013 to invest up to $15 billion in Ukraine’s sovereign Eurobonds. Soon afterwards, Russia bought Ukraine’s first Eurobond tranche worth $3 billion with a two-year maturity and a coupon rate of 5% per annum and coupon payments every six months.
Russia did not invest the other $12 billion in Ukraine’s bonds.