Zelenskyy signs law on moratorium on foreign debt repayment
President Volodymyr Zelenskyy has signed Law No. 11396, which allows the government to suspend foreign debt payments until October 1.
This is according to the website of the Verkhovna Rada.
As a reminder, the Parliament passed the relevant draft law on July 18. In addition to allowing the suspension of foreign debt payments, the document allows the government to transfer the state-guaranteed debt of the former Ukravtodor to the "perimeter" of the public debt and restructure it (it is a series of 2021 Eurobonds totaling $700 million + interest).
The Ministry of Finance called the adoption of this law a necessary technical solution that gives the government flexibility before reaching a restructuring agreement in principle with holders of Ukraine's public and publicly guaranteed external commercial debt.
As reported, Ukraine has managed to reach an agreement in principle with the Ukrainian Eurobondholders' Committee on debt restructuring.
The agreement in principle was reached with the creditors' committee, which includes Amundi SA, BlackRock Inc and Amia Capital LLP, as well as other investors, which together represent holders of about 25% of the bonds.
According to the Ministry of Finance, the restructuring agreement will see the existing outstanding Eurobonds exchanged for a package of new Eurobonds with a nominal reduction in the cost of debt of 37% initially and a reduction in the net present value of debt of about 60%.
Following the completion of the restructuring, the maturity of the Eurobonds will be extended, with the first $1.17 billion repayment due in 2029. For comparison, without the restructuring, the principal amount of $9.38 billion (excluding capitalized interest) would have been due in the period from 2024 to 2029.
