Thursday, August 27, 2015

Ukraine clinches debt-restructuring deal with int'l creditors. Fitch downgrades Ukraine’s rating amid reports of debt write-off

Ukrainian government and its international private creditors have reached an agreement on restructuring its outstanding foreign debt after five months of negotiations, Ukrainian Prime Minister Arseny Yatsenyuk said Thursday.

"Ukraine has reached an agreement with the creditors' committee on the restructuring and partial write-off of the debts," Yatsenyuk told a cabinet meeting.

  • Under the deal, Ukraine's debt of 19.3 billion US dollars will be cut by 20 percent or about 4 billion dollars, Yatsenyuk said, adding that the write-off will allow Ukraine to avoid a default in the near future.

Besides, the creditors' committee has granted Ukraine a 4-year extension of the loan repayment period, which will shore up stabilization of the country's economy in the medium-term perspective, Yatsenyuk said.

Ukraine has been in talks with its private foreign lenders over restructuring the public debt since mid-March.

Initially, Kiev tried to seek a 40-percent cut of the arrears, threatening to impose a moratorium on debt payments, while its lenders offered to extend the maturities of the debt and lower the coupons.

As of April 1, Ukraine's total external debt stood at 126 billion dollars or 110.5 percent of the country's gross domestic product.

  Xinhua -

Fitch downgrades Ukraine’s rating amid reports of debt write-off...

Fitch lowered the long-term foreign currency Issuer Default Rating of Ukraine’s to ‘C’ from ‘CC’, the international rating agency said on Thursday.
The rating action followed the announcement made by the government of Ukraine today that it had reached an agreement with a representative group of creditors for a debt exchange that would result in a 20% reduction in principal and a postponement of principal repayments on $18 bln of government and government-guaranteed Eurobonds, Fitch said. "This represents a Distressed Debt Exchange (DDE) that results in material losses to bondholders and is being conducted in order to avoid default," the rating agency said.
The rating agency does not envisage developments that would result in positive rating action at the present time, Fitch reported.

Ukraine agrees foreign debt restructuring

Earlier on Thursday, Ukraine’s Prime Minister Arseniy Yatsenyuk said at an extraordinary cabinet meeting that Ukraine had agreed with foreign creditors on debt restructuring, which involves a 20% write-off of the Ukrainian debt. According to Yatsenyuk, Russia has not joined to the creditors' committee. "We declare that Russia will not receive other conditions," he said.
In her turn, Ukraine’s Finance Minister Natalie Jaresko added that Ukraine had agreed to write off $3.8 billion of $19.3 billion debt. The repayment of the loan postponed for 4 years.

According to the Russian Finance Minister Anton Siluanov, Ukraine reached that agreement with commercial creditors, but Russia is an official lender and the restructuring program is not applied to it.
"We regard ourselves as official creditors. They meant first of all the settlement of debt to commercial creditors, while the settlement of debt to official creditors, with countries like Russia, is a separate issue," the Minister said.
Siluanov added that the Russia may invest the funds it expects from Ukraine in national infrastructure projects.
Russia took a tough stance on the possibility of easing the payments terms for Ukraine and consistently refused to negotiate on restructuring programs offered by Kiev.
Moscow expects a full repayment of the loan worth $3 billion in December 2015. In late June, Ukraine made a payments worth $75 mln to Russia in compliance with the schedule.

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