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Mittwoch, 29. Juli 2015

Ukraine Bonds Climb as Creditors Presented With New Proposals

Ukraine Bonds Climb as Creditors Presented With New Proposals

Ukraine’s bonds rose to a five-month high as the nation said talks to restructure $19 billion of debt will continue this week after new proposals were presented to creditors.
The government is expecting to receive a response in the coming days to proposals it handed to a creditor group led by Franklin Templeton about a week ago, Finance Minister Natalie Jaresko said in Kiev on Monday. The latest offer is “market-orientated” and “fair,” Prime Minister Arseniy Yatsenyuk said at today’s meeting.
Ukraine’s bonds are heading for their biggest monthly gain this year after the country made a $120 million interest payment on Friday, signaling progress is being made in restructuring negotiations. The two sides agreed on July 1 to start direct talks after a two-month standoff over whether there should be a writedown to the face value of the nation’s Eurobonds with Ukraine repeatedly threatening to stop servicing its debt.
“It looks like the Ukrainian government is not keen to impose a moratorium, so they need to find other ways to complete the talks,” Konstantin Kucherenko, a Kiev-based bond-trader at Dragon Capital, said by e-mail. “I assume the new proposal still includes a principal haircut, although likely a smaller one than the 40 percent asked for before.”
The nation’s $2.6 billion of bonds maturing July 2017 gained 0.43 cents to 55.67 cents by 7:01 p.m. in Kiev, the highest level since Feb. 12. They have gained 7.2 cents this month.

Russian Bond

Jaresko reiterated today Ukraine’s stance that a $3 billion Eurobond Russia bought from the regime of former Ukrainian President Viktor Yanukovych should receive the same treatment in the restructuring as all of the other international debt.
The creditor group’s public position had been that a so-called haircut isn’t needed to comply with terms of an International Monetary Fund loan being offered to Ukraine. A spokesman for the bondholder committee declined to comment on the latest developments in the talks.
The IMF has stipulated the country should, among other targets, cut debt to 71 percent of economic output by 2020 to qualify for a $17.5 billion loan.
The Washington-based lender has approved a second tranche of the loan, Ukraine President Petro Poroshenko said in an interview with TV channel STB on Saturday. IMF officials were sufficiently encouraged by the pace of the debt talks to allow the release of the $1.7 billion installment, a person familiar with the discussions said last week.
If a debt deal isn’t finalized by the next IMF review of Ukraine, scheduled for Sept. 15, Ukraine may impose a debt moratorium, analysts at Moody’s Investors Service including Kristin Lindow said in a research note on Monday.
Ukraine is seeking debt relief after a 16-month conflict with pro-Russian rebels in its easternmost regions plunged the economy into a recession and drained foreign-currency reserves.

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