Russia has yet to receive bond restructuring offer from Ukraine

The Russian side has yet to receive any offer from Ukraine on restructuring its USD 3 bln debt, Deputy Finance Minister Sergei Storchak told journalists on Jan. 18, as reported by Interfax. “We need an official offer. But there aren’t even unofficial offers,” he said. “We are always ready to sit down at the table and move forward, in order to try to reach an agreement”.

Recall, Ukraine offered the Russian holder of USD 3 bln in Eurobonds maturing on Dec. 20, 2015 the same restructuring conditions as all the other holders of USD 15 bln in Ukrainian Eurobonds. The offer was a part of the IMF’s Extended Funds Facility program with Ukraine aimed at meeting the program’s objectives. The Russian side declined to consider the restructuring offer, claiming it’s an official lender that deserves special treatment. On Dec. 16, the IMF board recognized the “Russian debt” as official for its internal policies. Before that, on Dec. 10, the IMF changed its Lending into Arrears policy that allowed Ukraine continued cooperation with the Fund even if it’s in default on official debts, given certain conditions are met. IMF Spokesman Gerry Rice stressed on Jan. 14 that the IMF “encourages Ukraine and Russia to achieve a cooperative solution that contributes to the program’s financing and debt objectives.”

Alexander Paraschiy: It wouldn’t be accurate to state that Ukrainian government did not send any restructuring offer to the Russian bond holder, but it seems true that the government did not offer anything to Russia as the official lender. We believe the key reason the Ukrainian side is not rushing to do so is it does not agree with Russia’s status as an official lender. It was only the IMF that decided that the USD 3 bln debt is official, while a U.K. court – to which Russia is going to file a claim on this debt soon – may decide this debt isn’t official. To increase the chances of a favorable outcome, Ukraine should not behave in a way that recognizes this debt as official.

At the same time, by not addressing Russia as an official lender, Ukraine faces the risk of losing the status of a borrower that “makes good faith efforts,” as defined by the IMF, which may prevent the IMF from providing Ukraine with a new tranche. However, we still expect the IMF won’t pay much attention to this issue when deciding on its next tranche to Ukraine.

Источник: Конкорд Капитал