KYIV. June 2 (Interfax-Ukraine) – The Ukrainian Finance Ministry says progress has been made in negotiations with private creditors on restructuring the country’s foreign debt and an agreement on holding a telephone conversation with the ad hoc committee of international commercial creditors on June 5, following intensive negotiations between advisers slated for next week.
“Following today’s [Friday] call between the principals and advisors of the Ministry of Finance of Ukraine and the ad hoc committee of international commercial creditors, the Ministry is pleased that engagement between both parties on restructuring Ukraine’s sovereign debt is accelerating,” the Finance Ministry said in a statement circulated on Friday evening.
The purpose of the telephone talks scheduled for June 5 is to assess progress in the negotiations, it said.
“We reiterate Ukraine’s commitment to negotiate in a collaborative and good faith manner as per international principles. The Ministry is confident that a mutually beneficial agreement will be reached in accordance with the targets agreed under Ukraine’s IMF program,” it said.
The Ministry of Finance also said it welcomes the statement from German Finance Minister Wolfgang Schauble, noting the G7 Finance Ministers’ support for “a successful resolution of Ukraine’s debt restructuring.”
It was reported earlier that, after the IMF had endorsed a new four-year extended fund facility for Ukraine for $17.5 billion, the Finance Ministry started consultations on debt restructuring with creditors for about $23 billion on March 13 so as to save about $15.3 billion on payments while the program remains in effect.
Ukraine has engaged Lazard Freres SAS as a financial adviser and White&Case as a law adviser. The creditors committee has been formed of five major holders of the Ukrainian debt, advised by Blackstone and Weil Gotshal.
The Ukrainian Finance Ministry has said repeatedly that, to attain the IMF program’s targets, not only should the debt clearance deadlines be extended, but also part of these debts should be written off and the interest lowered, except for the loan participation notes issued by Oschadbank, Ukreximbank, and Ukrzaliznytsia.
However, major holders of Ukrainian bonds are unwilling to agree to the cancellation of the principal debt, arguing that the size of the debt relief proposed is too big. Russia also demands the repayment of its $3 million loan to Ukraine by the end of 2015, refusing to agree to its restructuring.
The creditors committee reported on May 18 that it consisted of funds governed or represented by BTG Pactual Europe LLP, Franklin Advisers Inc., TCW Investment Management Company and T. Rowe Price Associates, Inc. and was maintaining regular contacts with other holders of Ukrainian bonds, which hold in aggregate over $10 billion worth of Ukrainian debt. The creditors once again objected to writing the debt off.
To intensify the negotiations, the Ukrainian government passed a bill through the Verkhovna Rada on May 19 entitling it to suspend payments on debts included in the restructuring perimeter. The president signed the bill into law on May 28, but the document has not yet taken legal effect.
