Important agreement

Ukraine averts bankruptcy with debt restructuring

Good news for President Volodymyr Zelensky from the financial front

(Bild: APA/AP)

Ukraine has reached an agreement with private creditors on debt restructuring. This has averted a national bankruptcy for the war-torn country, which was feared as early as August.

"The agreements reached provide for a reduction in Ukraine's debt by lowering the nominal value of the Eurobonds by 37 percent in the initial phase," announced Finance Minister Serhiy Marchenko after the successful conclusion of the negotiations. With the issue of new bonds and maturities between 2029 and 2036, the debt amount would be reduced by the equivalent of almost eight billion euros. Originally, the bonds would have been due for repayment between 2024 and 2029. Including interest, the creditors thus waived around 60 percent of the originally agreed payments.

Finance Minister Serhiy Marchenko

(Bild: APA/AFP/Odd ANDERSEN)

Ukraine will thus save the equivalent of just over 20 billion euros by 2033, it said. "This will free up important financial resources that can be used for defense and social spending," emphasized Marchenko. 

Old government bonds will be replaced by new ones
Specifically, the old government bonds are to be replaced by new ones in two waves. Interest payments on the new bonds in the first series are to be made from 2025. The maturities of the securities range between 2029 and 2036. The bonds in the second series have maturities between 2030 and 2036, with no interest payments due before 2027. If the Ukrainian economy performs better than expected by the IMF in 2028, higher payments would be due from the country. The debt haircut could then be reduced to 25 percent. 

According to Ukraine, both the IMF and the country's other lenders have signaled their support. An insider told Reuters that Ukraine's payments to the investor group should be less than 200 million dollars by the end of 2025.