The possibility of a new peace deal agreement that could improve the situation in Eastern Ukraine is off the table, says Ukraine’s president Petro Poroshenko, as a contact group meeting in Minsk ended with a proposal to ensure a stable ceasefire.
Juncker said both parties must implement the accord in its entirety, adding, “I am addressing myself to Russia in particular, because the Russian side appears not to be accomplishing the tasks it should be”. Ukraine will pay a coupon rate of 7.75 per cent, slightly higher than current levels. The negotiations-which required officials and investors to shuttle between London, San Francisco and Washington, D.C.-focused on whether bondholders would accept a haircut.
The possibility of Ukraine either outright defaulting on its obligations or imposing a payment freeze could have shut Kiev out of global borrowing markets and severely hampered its IMF-led austerity and economic restructuring drive. If it fails, a future Ukrainian government will be seeing more of the creditor committee members, headed by USA asset manager Franklin Templeton.
In the short term, moreover, the agreement will do little for the average Ukrainian, now far poorer than he was at the end of the Soviet Union.
The debt relief is part of a broader financial support program agreed on with the worldwide Monetary Fund. Principal repayments due on Ukraine’s worldwide bonds from this year through 2017 amount to $6.7 billion, and will now be deferred.
For the creditors, that’s more or less a wash. “It was good for us to sit down, to literally break bread and move beyond the rhetoric”.
Prime Minister Arseniy Yatsenyuk described the agreement as a blow to “enemy” Russian Federation.
“Fitch considers that this represents a Distressed Debt Exchange (DDE) under its criteria that results in material losses to bondholders and is being conducted in order to avoid default”, the agency said in a statement released late Thursday.
S&P kept Ukraine’s foreign-currency debt at CC, its second-lowest grade, with a negative outlook. The measures will apply to all the country’s outstanding debt.
“These elections are local, not national”.
“We want to see free travel between Ukraine and Europe sooner rather than later”, European Council President Donald Tusk said.