“We are quite happy”, said Yerlan Syzdykov, Head of Emerging Markets Debt at another bondholder, Pioneer Investors.
The Ukrainian government said Thursday it has reached a deal with its global bondholders to lighten its public debt burden, a crucial move that will help the country avoid default as it tries to cope with the devastating costs of war. That depends, though, on all owners of Ukraine’s worldwide bonds, of which there are hundreds, accepting the deal.
Later, Ukrainian officials and the ad hoc creditors’ committee issued a joint statement reporting significant progress made in the negotiations and reaching confidentiality arrangements. Russian Finance Minister Anton Siluanov, however, has already refused to restructure, showing yet again that for Russia, the matter is political.
Ukraine’s debt-restructuring agreement with creditors will probably result in a downgrade of the nation’s sovereign-credit rating to default status before leading to an improvement later, Standard & Poor’s said.
Prime Minister Arseniy Yatsenyuk said on Friday he is convinced that Kiev and Moscow should go back to the last winter deal, which saw Ukraine pre-pay for gas but receive a sizeable discount.
Russian President Vladimir Putin sent troops into Ukraine’s Crimea region after the toppling of Yanukovich, his pliable ally, and annexed the seized territory in March 2014. On May 19, Ukraine’s parliament passed a law allowing the government to impose a moratorium on foreign debt payments. Ukraine’s economy has shrunk since fighting started there, with the World Bank forecasting negative annual growth of 7.5 percent in 2015.
Ukraine will temporarily suspend payments on that bond and a €600 million note due in October, the Finance Ministry said in today’s statement.
Juncker also gave assurances on highly anticipated plans to lift visa requirements for Ukrainian citizens visiting the European Union, and said he expects the commission to give a green light by the end of the year. But the deal announced Thursday only accounts for a 4.3%-of-GDP reduction, according to the ministry. “That’s an enormous amount for us”, Finance Minister Natalie Jaresko told CNBC on Thursday. An earlier version of this article incorrectly stated her first name.