Ukraine creditors fail to agree on MinFin restructuring plan

The position of the committee representing international commercial creditors on the debt restructuring proposal by Ukraine remains unchanged, the Finance Ministry stated in its June 5 press release that followed a call with the committee. The details of the creditors’ position was not disclosed, while MinFin stated that the creditors offered to offload their sovereign claims onto the books of the central bank. MinFin called such a proposal unacceptable and it stressed the need for more constructive “dialogue regarding appropriate burden-sharing by creditors.” The talks with owners of USD 23 bln in debt instruments on their restructuring were initiated by MinFin in March and were targeted towards extending their maturity, reducing interest rates and decreasing the principal on debt. The Finance Ministry was insisting on the importance of all three targets, while creditors do not look ready to accept a haircut.

Meanwhile, Finance Minister Natalie Jaresko told an interview with the dt .ua news site, published on June 5, that success in the debt operation is “very important for making the decision” for the IMF to continue its Extended Fund Facility (EFF) program, “but not a necessary condition.” She clarified that the importance of the debt operation means its results will determine the way the IMF will cooperate with Ukraine in the future. Recall, a week before, the IMF wrote in its press release that that completion of the debt operation “will ensure that public debt is sustainable ... and the program remains fully financed, which are requirements for the completion of the review” of the EFF program.

Alexander Paraschiy: Just a week before the initial deadline to approve the results of the debt operation (which is mid-June, as had been agreed with the IMF), Ukraine and its creditors look to be far from finding common ground. We see some chance that the planned June 8-10 visit of the Ukrainian prime minister and finance minister to the U.S. will bring some progress to restructuring talks.

At the same time, Friday’s MinFin statement may boost interest in Ukrainian sovereign Eurobonds. Jaresko’s claim that a successful debt operation is not a necessary condition for new IMF tranche should also add optimism to the market.

Источник: Конкорд Капитал