Ukraine’s government has been trying to restructure its $19 billion in debt, as the conflict in the eastern part of the country puts pressure on its economy.
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The two-sentence statement left little scope to “read between the lines” on the state of progress, Nomura Holdings strategist Tim Ash said by email.
Ukraine must pay a $60 million coupon on August. 23 and a $500-million bond maturing on September 23.
“Talks will be continuing on Friday”, the source said, giving no details on what format the negotiations would take.
The eastern European nation warned on Friday that pro- Russian rebels shelled the army more actively than at any time in the past six months and may be planning a fresh offensive. Kiev had said it would halt repayments if an agreement was not reached this week. On Friday, data showed the economy contracted 14.7 percent year-on-year in the second quarter. The nation is the most-likely sovereign to default in the next 12 months, according to Bloomberg sovereign risk analysis.
“It’s a pity that after flying so far, Jaresko will leave with nothing”, Vitaliy Sivach, a Kiev-based bond trader at Investment Capital Ukraine, said by email. Both sides regularly accuse the other of violating the terms of the agreement and casualties are reported nearly daily.
Ukrainian Finance Minister Natalie Jaresko, who personally came to San Mateo, California, the United States, to meet with the creditors, described the current round of the negotiations as the “final opportunity to reach a full agreement.”
Billionaire investor George Soros said in an article in the Wall Street Journal on Thursday that investors should encourage Ukraine in its request for debt relief to help the war-torn country undertake vital economic reforms.
The worldwide Monetary Fund (IMF) has made debt restructuring a condition for Ukraine to receive all the tranches of the $17.5 billion bailout that the organization is providing. Ukraine’s Eurobonds have returned 4.9 percent in the past month, the most in a Bloomberg emerging- market bond index. Russia denies the charge, claiming the Russians fighting with the separatists in Ukraine are volunteers.
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Jakob Christensen, senior economist at Exotix, reckons a debt moratorium is possible but he also assigns a 65 percent chance to the government accepting a smaller haircut than it needs – maybe 22.5 percent – because a default now would raise future borrowing costs.
