The Strategist

Ukraine starts talks on state debt restructuring and new financing

10/11/2023 - 09:19

Ukraine has begun negotiations with key bondholders to restructure $20 billion in public debt and find new investors. Grant funding is one choice, although IMF programs do not offer it throughout the debt restructuring period, according to Reuters.
Ukraine has commenced active negotiations with significant investors in order to discuss strategies for restructuring its $20 billion foreign debt and the potential for obtaining additional funding, writes Reuters citing three sources.  

One alternative is to issue bonds—also known as Brady bonds—secured by U.S. Treasuries, akin to those issued by Latin American nations in the late 1980s.

Yuriy Butsa, the head of Ukraine's debt management office, oversaw the negotiations and, according to sources close to the agency, was gathering input from investors on his offers.

According to the agency's sources, talks with bondholders were originally planned to begin in early 2024, but they were accelerated due to worries that support for Ukraine from abroad may wane in the face of a lengthy war with Russia.

Bondholders consented to a two-year payment freeze in August 2022. Several experts anticipated that the nation would request a commensurate extension of the payment moratorium from bondholders as a result of the majority of Ukraine's bilateral creditors suspending their obligations until 2027.