Ukraine’s creditors vote this week on a government proposal to defer payments on the war-torn country’s international bonds for 24 months as Kyiv hopes to swerve a $20 billion messy default.
Bondholders have until 5 p.m. New York time on Tuesday to decide whether to back or vote down the proposal by Ukraine’s government, which faces a $5 billion monthly financing gap and liquidity pressures following Russia’s invasion on Feb. 24. Time is precious: the country has a $1 billion bond maturing on Sept. 1.
Creditors will likely wait until relatively close to the deadline to vote, said a person familiar with Ukraine’s thinking. Investors are expected to support the debt standstill, the person added. When announcing its proposal, Ukraine’s finance minister Sergii Marchenko said it had “explicit indications of support” from some of the world’s biggest investment funds including BlackRock, Fidelity, Amia Capital and Gemsstock. read more
Creditors of Ukravtodor and Ukrenergo, two state-owned firms that have government guarantees on their debt, also have until Aug. 9 to vote on a plan similar to the sovereign.The two-year moratorium on external debt payments would allow Ukraine to avoid a contractual or legal default, as any amendment on the bonds’ terms would have the creditors’ backing, Rodrigo Olivares-Caminal, professor of banking and finance law, at Queen Mary University of London, told Reuters.