Ukraine avoided default

Ukraine managed to avoid default on public debt. As a result of three weeks of negotiations, about 75% of holders of government bonds and warrants (papers whose yield is tied to GDP growth) agreed to defer and revise the terms of Ukraine's debt obligations. This is stated in the message on the website of the Ministry of Finance of Ukraine.

“The successful agreement is evidence of the willingness of investors to support Ukraine and mitigate the potentially high burden of the instrument on the Ukrainian economy during the period of post-war growth,” the Ministry of Finance said in a statement.

Minister of Finance of Ukraine Serhiy Marchenko thanked international creditors for their solidarity and readiness to help Ukraine in such a difficult period for it. He also noted that the postponement of payments on foreign debts frees up significant funds to finance current expenses, will help meet the needs of the state budget of the country in a state of war.

In addition to state obligations, the state-owned companies Ukrenergo and Ukravtodor received deferrals. For the first company, the deferment was achieved on green bonds in the amount of $825 million at 6.875% and maturity until 2026. For Ukravtodor, about a debt in the amount of $700 million at 6.25% until 2028. The debts of state-owned companies are guaranteed by Ukraine, so if it is impossible to fulfill its obligations, the state must repay the debt.

“We were also pleased to hear that the majority of our investors expressed their willingness to participate in the post-war reconstruction of Ukraine. We hope that sooner or later we will recover from the economic shock caused by the war unleashed by Russia and return to the market, as always, a responsible and reliable issuer,” said Yury Butsa, government commissioner for public debt management.

Negotiations on the restructuring of the Ukrainian public debt began on June 19. It was about several issues of bonds and warrants linked to GDP with maturity in the period from 2022 to 2028. The total amount of public debt was estimated at $19.6 billion, following the results of negotiations, Ukraine will be able to release about $5.8 billion to finance current budget expenditures. Nevertheless, all the debt problems of Ukraine have not been resolved, one of the country's largest state-owned companies, Naftogaz, has already declared a default, as it could not agree with its creditors on debt restructuring.

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