Ukraine agrees with Eurobonds owners on debt restructuring
At closed meetings in July, Ukraine was able to reach an agreement with the Ad Hoc Creditor Committee of Ukraine’s Eurobond owners regarding debt restructuring, which will help avoid default, announced Prime Minister Denys Shmyhal.
As the Ministry of Finance notes, agreements were reached in principle — this is an important stage in the process of restructuring the state external commercial debt of Ukraine. An agreement was reached with the owners of Eurobonds on the restructuring of sovereign debt securities issued on international capital markets for $23.4 billion.
According to Shmyhal, this will make it possible to save $11.4 billion on debt service over the next three years and $22.75 billion by 2033.
"In this way, we will be able to free up resources for urgent needs: our defense, social protection and recovery," the prime minister writes.
The restructuring agreement will see the existing Eurobonds in circulation exchanged for a package of new Eurobonds with a nominal reduction in the cost of debt of 37% at the initial stage and a reduction in the net present value of the debt of around 60%.
After the restructuring is completed, the maturity of the Eurobonds will be extended: the first repayment of $1.172 billion will take place in 2029.
By comparison, without the restructuring, $9.381 billion in principal (excluding capitalized interest) would have been due between 2024 and 2029.
According to the agreements reached, new Eurobonds will be issued with maturities in 2029, 2030, 2034, 2035 and 2036.
Currently, Ukraine intends to implement the restructuring agreement as soon as possible, provided the documentation is ready.
As a reminder, the grace period during which Ukraine did not repay its foreign debts ends on August 1. There are two options for the development of events - to agree on extending the period of freezing debt service or actual default.