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Next IMF tranche for Ukraine impossible without reaching agreements with its bond holders

May 20, 2015, 20:52 UTC+3 MOSCOW
Ukraine has to restructure debts worth a total of $15 bln, of which $3 bln are debt obligations to Russia, around $8 bln to the Franklin Templeton fund
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MOSCOW, May 20. /TASS/. The next tranche of financial aid from the International Monetary Fund (IMF) to Ukraine is impossible without reaching agreements with holders of its bonds, including the Franklin Templeton Investments hedge fund, a source familiar with the situation told TASS Wednesday.

"If Ukraine cannot reach agreements on debt restructuring with the Templeton hedge fund and other holders of its bonds it will not receive another tranche from the IMF," the source said. "This directly results from the conditions of the IMF’s program of extended credit financing of Ukraine approved at the beginning of this year," he added.

Ukraine has to restructure debts worth a total of $15 bln, of which $3 bln are debt obligations to Russia, around $8 bln to the Franklin Templeton fund. Among other Ukraine’s investors are Pimco Advisors, Bluebay Asset Management, Blackrock Group Limited, Goldman Sachs Group, Nomura, Credit Agricole and other biggest global investment funds.

The source stressed that though for now Ukraine’s parliament has granted the Government the right to impose moratorium on foreign debts payments, many experts took this decision as a preparation to a technical default.

As was reported earlier the International Monetary Fund approved a $17.5 billion loan facility for Ukraine in March as part of the international aid package estimated at about $41 billion and intended for four years. Ukraine received the first loan tranche of $5 billion from the IMF in March and needs to restructure $15.3 billion in sovereign debt to private investors to qualify for the second installment.

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 does not plan to participate in the Ukrainian debt restructuring program and expects Ukraine to repay its liabilities in December 2015. 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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