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Kiev threatens with moratorium on debt repayment to Russia

November 13, 2015, 13:07 UTC+3
Ukraine’s Prime Minister Arseniy Yatsenyuk said Kiev would introduce a moratorium on the payment of the debt to Russia if Moscow refuses to restructure it
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Ukraine’s Prime Minister Arseniy Yatsenyuk

Ukraine’s Prime Minister Arseniy Yatsenyuk

© Maxim Nikitin/TASS

KIEV, November 13. / TASS /. Ukraine intends to introduce a moratorium on the payment of its $3 billion debt to Russia, if Moscow refuses to hold further negotiations on the debt restructuring, Ukraine’s Prime Minister Arseniy Yatsenyuk said during a joint press conference with US Treasury Secretary Jack Lew on Friday.

"Russia won’t get better terms than other lenders. If it refuses to negotiate we will introduce a moratorium on the payment of Russia's debt," Yatsenyuk said.

Putin will meet head of IMF

 Kremlin spokesman Dmitry Peskov said on Friday that Vladimir Putin will meet with the International Monetary Fund (IMF) Managing Director Christine Lagarde "on the sidelines" of the G20 summit.

We’re planning a meeting with Lagarde," Peskov said, though he refused to comment whether the issue of Kiev’s $3 bln debt to Russia due to be repaid in December 2015 will be on agenda.

As for prospects of Russia’s announcing this loan’s default in case Ukraine fails to repay it Peskov said: "The issue is about sovereign debt. Non-payment will mean default situation."

Kiev ready to sue Russia over debt restructuring

Ukrainian Prime Minister Arseniy Yatsenyuk said in mid-October that Ukraine was ready to start litigation with Russia over Kiev’s $3 billion debt restructuring. According to Yatsenyuk, Kiev has proposed that Moscow should consider once again Ukraine’s terms of its debt restructuring and write-down earlier offered to the special creditors’ committee. In case of refusal, Kiev intends to start legal proceedings, he said.

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 demands its full redemption.

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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