KIEV: Ukraine bondholders will probably have a tougher time in the next round of debt restructuring talks than creditors of the nation’s third-largest bank.
State Import-Export Bank of Ukraine awarded creditors higher coupon payments and guaranteed to pay principal in full to avert default on $750 million of bonds due Monday. The price of Ukraine’s sovereign Eurobonds suggests holders will have to accept as much as a 50 percent cut to face value, according to Citigroup Inc.’s Ivan Tchakarov.
“There are some people who are trying to project the solution that was agreed with this bank on to the upcoming sovereign negotiations, but that doesn’t make any sense from Ukraine’s point of view,” Tchakarov, Citigroup’s economist in Moscow, said by phone on Monday. “From the point of view of the sustainability of Ukrainian debt, it needs to be pushing for a haircut.”
Ukraine must save $15.3 billion in debt-servicing costs over four years to clinch the next slice of a $17.5 billion International Monetary Fund loan in talks scheduled for June. Its yearlong conflict with pro-Russian rebels has left Ukraine without enough reserves to pay its debt beyond this year.
Ukreximbank had just two weeks to win over bondholders after failing to secure a three-month maturity extension on April 13. The bank offered on April 20 to increase the coupon to 9.625 percent from 8.375 percent and push the redemption date back to April 2022 if it got more time to negotiate the deal.
