Ukraine reaches agreement on external debt restructuring

Ukraine's Ministry of Finance reported the information.

According to the agreement, the existing Eurobonds will be 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%.

"This is the level that will allow us to restore debt sustainability, fulfill the goals of the IMF program and comply with agreements with international partners, in particular, with the Group of Creditors of Ukraine. The agreement will provide USD 11.4 billion in debt service savings over the next 3 years. By 2033, the savings will amount to USD 22.75 billion. This will free up vital financial resources that can be used for defense and social spending," the Ministry of Finance explains.

The restructuring agreement also provides for an extension of the maturity of the Eurobonds. In particular, the first repayment will take place in 2029 in the amount of USD 1.172 billion.

The agreement covers the issuance of new Eurobonds: 4 series of A bonds due in 2029, 2034, 2035 and 2036 and 4 series of B bonds due in 2030, 2034, 2035 and 2036.

"Coupon payments of the Bonds A: 1.75% in 2024-2025, 4.5% in 2026 - the first half of 2027, 6% in the second half of 2027-2033, and 7.75% starting from 2034 and thereafter. Coupon payments of B bonds: none until the second half of 2027, then 3% from the second half of 2027 to 2033, and an increase to 7.75% from 2034 onwards," the agency added.

It is emphasized that the agreements reached are supported by the Committee of Creditors of Ukraine. At the same time, the agreement is in line with the targets of the IMF's Extended Fund Facility program, which stipulates that by the end of 2028 the debt-to-GDP ratio will be 82%, by the end of 2033 - 65%, and the average financing requirement will be 8% of GDP in 2028-2033.

"Today we have reached key agreements with the Committee of Ukraine's Eurobond holders. This is an important stage in the debt restructuring process, which will save USD 11.4 billion on servicing it over the next three years and $22.75 billion by 2033. This will allow us to free up resources for urgent needs: our defense, social protection, and recovery," emphasized Ukrainian Prime Minister Denys Shmyhal.

• On July 21, economist Penzin noted that a technical default would be dangerous for Ukraine.