Ukraine has reached a debt restructuring agreement with private creditors, averting a national default in the war-torn country that was feared in August.
“The agreements reached provide for a reduction of Ukraine’s debt by reducing the value of Eurobonds by 37 percent in nominal terms at the initial stage,” Finance Minister Serhiy Marchenko said after the successful conclusion of the negotiations. With the issuance of new bonds and maturities between 2029 and 2036, the debt amount will decrease by almost eight billion euros. The bonds were originally supposed to be repaid between 2024 and 2029. Including interest, the creditors forgave about 60 percent of the originally agreed payments.
Ukraine will save the equivalent of just over 20 billion euros by 2033, the report said. “This will free up significant financial resources that can be used for defense and social spending,” Marchenko stressed.
Old government bonds are being replaced by new ones
In concrete terms, the old government bonds will be replaced by new ones in two waves. Interest payments on the new bonds from the first series will have to be made from 2025. The securities have maturities between 2029 and 2036. Bonds from the second series have maturities between 2030 and 2036. No interest payments may be due before 2027. If the Ukrainian economy performs better than the IMF expects in 2028, higher payments from the country would be due. In that case, the debt reduction – the so-called haircut – could be reduced to 25 percent.
According to Ukraine, both the IMF and the country’s other lenders have expressed support. An insider told Reuters that Ukraine’s payments to the investor group should be less than $200 million by the end of 2025.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
