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Moscow plans no response to Kiev’s decision on foreign debt moratorium — FM

May 20, 2015, 13:46 UTC+3 MOSCOW

Lavrov said Kiev's move aims at triggering a default so that the property remaining amid conditions when asset prices fall below the bottom level can be purchased cheaply

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©  AP Photo/Emilio Morenatti

MOSCOW, May 20. /TASS/. Russia plans no legal measures in response to a decision by Ukraine’s parliament on a possible foreign debt moratorium, Russian Foreign Minister Sergey Lavrov said on Wednesday.

"I believe the civilized world will respond in the same manner as we do from the viewpoint of perceiving the situation as full discredit for the regime, on which hopes were placed," Lavrov said at the Federation Council, the upper house of Russia’s parliament, in reply to a question about a possible reaction from other countries.

"The civilized world has long come to realize with whom it has to deal with and realize that the Ukrainian authorities do not keep or cannot keep their word," the Russian foreign minister said.

"As for the decision by the Verkhovna Rada, this is deplorable," Lavrov said.

"There are estimates that this step suggests not even the inevitability of a default but that this step is designed to trigger a default so that the property remaining amid conditions when asset prices fall below the bottom level can be purchased cheaply," the Russian foreign minister said.

"We’ll not take any legal measures now," Lavrov said. "We have specific deadlines for the repayment of $3 billion, which was provided for the purchase of Ukrainian government bonds," Lavrov said.

"We did not demand, although we had the right to demand, early repayment of these bonds. In any case, debt maturity comes at the end of the year and our position remains unchanged," the foreign minister said.

Ukraine’s Verkhovna Rada granted the government the right to declare a moratorium on foreign debt repayment, including the country’s $3 billion debt to Russia.

Ukraine’s external debt hit $72.9 billion as of late 2014 while its internal debt stood at $29 billion and its gold and foreign currency reserves were less than $10 billion.

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 subsequently decided against investing the other $12 billion in Ukraine’s bonds.

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