Advisers for Ukraine, Creditors to Meet in London Next Week
Ukraine creditor committee proposed taking $8 billion from central-bank reserves to repay debt
Reserves from Ukraine’s central bank, pictured, would be used to repay some of the debt. PHOTO: VINCENT MUNDY/BLOOMBERG NEWS
Advisers for both sides negotiating Ukraine’s debt restructuring will meet in London next week to work on a deal, according to a person familiar with the negotiations.
The meetings were arranged during a phone call Friday, which included the parties involved in the negotiation process, this person said.
The creditor committee of four firms that own roughly $8.9 billion of Ukraine’s debt, including largest bondholder Franklin Templeton Investments, proposed on May 9 extensions of up to 10 years and cuts in interest payments, people familiar with the negotiations said.
Under the proposal, 40% of the debt would be repaid using $8 billion from Ukraine’s central bank reserves, these people said, with the remainder coming from the country’s budget.
In a statement late Friday, Ukraine’s finance ministry said it was “pleased that engagement between both parties on restructuring Ukraine’s sovereign debt is accelerating.”
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Ukraine has about $19 billion of sovereign debt outstanding.
The group of bondholders, which includes T. Rowe Price Group Inc., TCW Group Inc. and BTG Pactual Europe LLP, has said it wouldn’t accept a reduction in the value of their holdings.
The International Monetary Fund, which in March approved a bailout package of $17.5 billion in loans to be disbursed to Ukraine over four years, has said it is vital that an agreement is reached before June, when the IMF is due to review the country’s progress ahead of the disbursement of more aid.
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Alina Slyusarchuk, an analyst at Morgan Stanley, said that as investors are pushing for no reduction in the value of the bondholdings, there is a high chance the negotiations will drag on.
“In this likely scenario, we expect the deadline to be postponed” until September, when $500 million of bonds will mature, she said.
“Until that time, Ukraine can keep on paying” interest payments on its outstanding debt, saidVadim Khramov, a former IMF staffer who is now an economist at Bank of America Merrill Lynch.
Write to Christopher Whittall atchristopher.whittall@wsj.com and Chiara Albanese at chiara.albanese@wsj.com
