Ukraine reaches agreement with creditors to restructure $23.4 bln in foreign debt, extending Eurobond repayment period

Ukraine and its creditors have agreed in principle to restructure $23.4 billion in foreign debt, which will extend the maturity of Eurobonds.

Ukraine's Ministry of Finance's press service reported that.

"The restructuring agreement will provide that the existing Eurobonds in circulation will be exchanged for a package of new Eurobonds with a nominal reduction in the value of the debt by 37% at the initial stage and a reduction in the net present value of the debt by about 60%," the report said.

Following the completion of the restructuring, the maturity of the Eurobonds will be extended: the first repayment of USD 1.172 billion will take place in 2029. For comparison, without restructuring, the principal amount of debt is $9.381 billion. US (excluding capitalized interest) would be payable between 2024 and 2029.

Also, as per the agreed terms, new Eurobonds will be released. This will include four sets of Bonds A, with maturity dates in 2029, 2034, 2035, and 2036, and four sets of Bonds B, which will mature in 2030, 2034, 2035, and 2036.

Bond A Coupon Payments: 1.75% in 2024-2025, 4.5% in 2026-H1 2027, 6% in H2 2027-2033, and 7.75% from 2034 onwards.

Bond B Coupon Payments: None until the second half of 2027, then 3% from the second half of 2027 until 2033, and rising to 7.75% from 2034 onwards.

The Committee of Creditors of Ukraine has endorsed the agreements that align with the objectives of the IMF Extended Financing Facility program. These include (1) reducing the debt-to-GDP ratio to 82% by 2028, (2) further reducing the debt-to-GDP ratio to 65% by 2033, and (3) maintaining an average financing need of 8% of GDP during the years 2028-2033.

"Currently, Ukraine intends to implement the restructuring agreement as soon as possible, provided the documentation is ready," the Ministry of Finance noted.

For reference:

On July 22, Ukraine published a statement on the London Stock Exchange in which it announced that as a result of closed meetings from July 12 to 19 with the Committee of Eurobond Owners of Ukraine, agreements in principle were reached regarding the restructuring of sovereign debt securities issued on international markets capital amounting to USD 23.4 billion.