On May 30, 2025, the Ukrainian Ministry of Finance announced its decision not to pay $665 million to holders of GDP warrants — financial instruments issued in 2015 as part of debt restructuring. This was the first default on these obligations since their creation.
What are GDP warrants?
GDP warrants are securities whose payments depend on the growth rate of the economy. If Ukraine’s GDP exceeds certain thresholds, investors receive additional payments. In 2023, the country’s economy grew by 5.3%, which triggered the obligation to pay about $665 million in June 2025.
Reasons for default
The Ukrainian government had previously imposed a moratorium on payments on GDP warrants from May 31, 2024. Attempts to restructure these obligations were unsuccessful: negotiations with major warrant holders, including large hedge funds, ended without agreement in April 2025. Finance Minister Serhiy Marchenko called these instruments “outdated” and stressed the need to revise them.
Consequences and risks
Credit rating: Moody’s has affirmed Ukraine’s rating at “Ca,” indicating a high risk of default.
Investor reaction: Despite the default, cross-default provisions were removed in 2024, limiting the spread of the consequences to other debt obligations.
International support: Ukraine continues to receive financial assistance from Western partners and the IMF, but the default may complicate future financing negotiations.
Outlook
Ukraine is seeking a complete restructuring of GDP warrants, including the possibility of exchanging them for other instruments or changing the terms of payment after 2028. However, the lack of agreement with investors and the ongoing war with Russia create uncertainty about the country’s future economic recovery.
Thus, the default on GDP warrants reflects Ukraine’s difficult financial situation and highlights the need to review the terms of its debt obligations amid ongoing conflict and economic difficulties.
