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Kiev refuses to offer Moscow better debt restructuring terms

August 27, 2015, 14:44 UTC+3 KIEV
The Ukrainian premier confirmed that Russia had not joined the creditors’ committee that Kiev had agreed on its debt write-down with
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Ukraine’s Prime Minister Arseniy Yatsenyuk

Ukraine’s Prime Minister Arseniy Yatsenyuk

© TASS/Maxim Nikitin

KIEV, August 27. /TASS/. Kiev does not intend to offer Russia the terms of its debt restructuring better than those for other creditors, Ukraine’s Prime Minister Arseniy Yatsenyuk said on Thursday.

The Ukrainian premier confirmed that Russia had not joined the creditors’ committee that Kiev had agreed on its debt write-down with.

"But we’re stating that Russia won’t get other terms," Yatsenyuk said.

Ukrainian Finance Minister Natalie Jaresko said on Thursday Kiev had agreed with creditors on writing down $3.8 billion out of its $19.3 billion debt,.

"It was decided to reschedule the repayment of the remaining $15.5 billion to 2019," she said.

Ukraine had taken efforts since March 2015 to agree with creditors on the restructuring of payments under its Eurobonds worth $20 billion.

The media reported early this week that the Ukrainian government and the creditors’ committee had agreed on writing down 20% to the face value of Ukraine’s Eurobonds.

Initially, the Ukrainian side insisted on writing down twice as much, i.e. 40% of its debt. A 20% debt write-down means that Ukraine will save $3 billion on debt repayment.

If the Ukrainian government had not agreed with the creditors, Kiev could have imposed a moratorium in September on debt repayment. Kiev will have to repay Eurobonds worth $500 million already on September 23. This would have automatically worsened the prospects for Ukraine to repay its $3 billion debt to Russia in December. Russia has said on many occasions that Ukraine should redeem its $3 billion Eurobond on schedule.

The Ukrainian financial authorities have said on many occasions they consider Russia’s $3 billion loan as a commercial debt and insist on its restructuring. Meanwhile, Russia insists the loan is a state debt and requires its full redemption.

Debt restructuring results are crucial for Ukraine to get new loan tranches from the IMF.

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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