Ukraine launches Eurobond exchange offer for debt restructuring
MOSCOW. Aug 12 (Interfax) - Ukraine announced an exchange offer and consent solicitation for its existing sovereign Eurobonds and Ukravtodor guaranteed Eurobonds totaling more than $20 billion on the Euronext Dublin and London Stock Exchange on Friday.
"We are entering the key stage of our debt sustainability recovery operation: today, bondholders begin voting on the proposal to exchange and approve amendments to the terms of our Eurobonds based on the agreement in principle reached with the Creditors' Ad Hoc Committee [on July 22]," Ukrainian media reported government commissioner for public debt management Yury Butsa as saying in a Finance Ministry press release.
"This stage concludes nearly two years of comprehensive consultations with the investment community aimed at finding optimal conditions that satisfy all parties, including the IMF and official creditors. Furthermore, the discussions with the broad investment community during the last couple of weeks confirmed that the agreement was positively received by the market. We believe that today's transaction incorporates all the necessary elements for a successful outcome," Butsa said.
When the deal is completed, Ukraine will reduce its public debt by $8.67 billion and save $22.75 billion in debt payments by 2033, allowing these budget resources to be used to address urgent needs, he said.
Ukraine announced on July 22 that it had reached agreement in principle on restructuring with an ad hoc committee of holders of its Eurobonds totaling about $23 billion that call for writing off 37% of the debt with the possibility of restoring 12% if the country reaches a certain GDP level in 2028.
For the remaining debt, Ukraine will issue new Eurobonds maturing in 2029-2036 with a yield that will gradually grow from 1.75% in the next few years to 7.75% at the end of the term. Payment for consent will be 1.25% of the amount of bonds being exchanged.
The deadline for bondholders to submit instructions to participate in the exchange is August 27, the results will be announced on August 28 and all settlements will be made on August 30 and the subsequent five days.
In order to go ahead, the exchange requires the consent of two thirds of all bondholders and at least half of the holders of each issue, on the condition that less than a quarter of holders of each issue are opposed to such consent.
Ukraine initially expected to conclude all negotiations with bondholders by August 1, the deadline for payments under the terms of a 2022 restructuring.
