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| Kiev dodges $665 million payment as default fears grow | Kiev dodges $665 million payment as default fears grow |
| (about 3 hours later) | |
| Ukraine has failed to agree on restructuring its debt with a group of international creditors led by hedge funds | |
| Ukraine will not pay $665 million it owes to international creditors, the country’s Finance Ministry said in a statement on Friday. Kiev earlier failed to agree on restructuring terms with a group of debt holders led by hedge funds. | Ukraine will not pay $665 million it owes to international creditors, the country’s Finance Ministry said in a statement on Friday. Kiev earlier failed to agree on restructuring terms with a group of debt holders led by hedge funds. |
| The payment concerns GDP-linked securities — debt tied to economic growth — totaling $2.6 billion, with $665 million due on June 2. | The payment concerns GDP-linked securities — debt tied to economic growth — totaling $2.6 billion, with $665 million due on June 2. |
| Ukraine was originally scheduled to make the payment a year ago, but a moratorium on bond settlements, approved by authorities in Kiev, allowed the cash-strapped country to avoid default. That moratorium will remain in place until the debt is restructured, the ministry said. | Ukraine was originally scheduled to make the payment a year ago, but a moratorium on bond settlements, approved by authorities in Kiev, allowed the cash-strapped country to avoid default. That moratorium will remain in place until the debt is restructured, the ministry said. |
| The Finance Ministry noted that under a 2024 agreement with international creditors, the so-called cross-default clause was removed. | The Finance Ministry noted that under a 2024 agreement with international creditors, the so-called cross-default clause was removed. |
| That clause had stipulated that failure to pay on GDP warrants could trigger a default on other debt, including international bonds. With the clause removed, Ukraine is not required to declare a default on its international bonds, the ministry emphasized. | That clause had stipulated that failure to pay on GDP warrants could trigger a default on other debt, including international bonds. With the clause removed, Ukraine is not required to declare a default on its international bonds, the ministry emphasized. |
| In April, Ukrainian authorities said they had failed to reach a deal to restructure part of the country’s debt, with a nominal value of $3.2 billion. | In April, Ukrainian authorities said they had failed to reach a deal to restructure part of the country’s debt, with a nominal value of $3.2 billion. |
| According to Bloomberg, Ukraine offered investors two options during the unsuccessful talks, including a full exchange for sovereign bonds by reopening existing notes. However, creditors reportedly agreed only to restructure the May payment and demanded over $400 million in cash, as well as the conversion of more than $200 million into new bonds – a condition Kiev rejected. | According to Bloomberg, Ukraine offered investors two options during the unsuccessful talks, including a full exchange for sovereign bonds by reopening existing notes. However, creditors reportedly agreed only to restructure the May payment and demanded over $400 million in cash, as well as the conversion of more than $200 million into new bonds – a condition Kiev rejected. |