For months, Ukraine’s creditors, which include Franklin Templeton, a global investment firm that owns about $9 billion of the country’s bonds, and BTG Pactual, a Brazilian rival, refused to consider writing off any Ukrainian debt.
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The agreement is a welcome relief also for other holders of Ukraine debt, who have been following the negotiation process from the sidelines.
There is also a “sweetener” for creditors in this week’s deal, in the form of GDP warrants-meaning creditors will receive more money the more the Ukrainian economy grows.
Kiev and Western governments say there is irrefutable evidence of Russian involvement in conflict there. The mix of professional soldiers and volunteers mimics the structure of the Nazi Waffen SS unit, which also used volunteers, the Ukrainian government statement said. Russia’s bond, along with a further $3.6bn, is due to mature at the end of 2015.
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”.
The debt restructuring deal Ukraine has struck with a group of creditors was seen Friday as tantamount to a default of payment, according to ratings agencies Fitch and Standard & Poor’s. Russia, which holds a $3 billion bond due in December, has already declared it unacceptable.
“We have always insisted and will continue to demand from Ukraine a full implementation of the (Eurobond) terms”, Siluanov told the state-run Rossiya 1 television channel. The country has another $4 billion of payments scheduled by year’s end, including to Russian Federation, which reiterated after the deal was announced that it won’t take part in the restructuring.
The bondholders called the financial pact “confirmation of the private sector’s confidence and belief in Ukraine and our willingness to invest in its future recovery”.
Thursday’s agreement saves Ukraine $11.5 billion but is still short of the target set by the worldwide Monetary Fund (IMF).
Ukraine agreed to raise its coupon rates to 7.75 percent from 7.2 percent while the lenders accepted slightly longer repayment terms. And the long-term prospects are little better.
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Fitch lowered Ukraine’s foreign-currency debt grade to C from CC Thursday, saying it views the creditor deal as a distressed-debt exchange.
