Ukraine failed to agree on restructuring of GDP warrants.
The Ministry of Finance announced this, Ukrainian News Agency reports.
It is noted that from October 16 to November 5, Ukraine held a series of meetings with members of the Special Committee, which includes institutional investors - owners of about 35% of Ukraine's GDP warrants.
The purpose of the negotiations was to discuss proposals for restructuring these instruments that meet the requirements of the IMF program and obligations to the Group of Official Creditors of Ukraine.
These negotiations are part of the Government's broader efforts aimed at restoring debt sustainability in accordance with the objectives of the IMF program.
During the period of limited negotiations between Ukraine and the warrant holders, extremely limited progress was achieved in discussing economic aspects.
Due to the lack of progress in reaching an agreement on the economic terms, Ukraine stated that it could not accept the offer of the Committee of Holders and refused to make any further offers to the Committee members within the limited negotiation period.
Ukraine remains committed to constructive negotiations with all holders of the GDP warrants with a view to finding a solution that would ensure long-term debt sustainability without jeopardizing the country's reconstruction and recovery.
During the second round of limited negotiations, Ukraine offered the holders an offer that takes into account the feedback received from market participants collected over the past months, as well as the diversity of the investor base of the GDP warrants. The structure of the offer provides for the exchange of the GDP warrants for new Ukrainian Eurobonds of Series C (C Bonds):
Under this offer, the holders of the warrants will receive new Series C bonds with an exchange ratio of 1.26.
The new notes will have a smoothed maturity schedule in 2030-2032 and a coupon that will start at 2.5% and gradually increase to 6.0% by 2030.
The offer also includes a cash component of 6 cents (including a 1 cent consent fee) per USD 1 of nominal value of the GDP warrants to encourage participation in the exchange offer and to partially compensate for the unpaid warrant payment that was due on June 2, 2025.
The offer includes a loss reinstatement provision that is intended to reduce the risks to warrant holders in the event of a further restructuring.
The proposal of the Owners Committee envisages a full exchange of GDP warrants for new series C bonds with significantly higher economic parameters than Ukraine's proposal, which are unacceptable to Ukraine and do not meet the parameters agreed upon with the IMF and the Group of Official Creditors of Ukraine. In particular, the proposal envisages a significant increase in the volume of public debt, a reduction in the maturity (with the first significant repayment already in 2029) and higher coupon rates - in the range from 5% to 7.75%.
As Ukrainian News Agency earlier reported, Ukraine failed to make a payment on these securities in the amount of USD 665 million by the specified deadline on June 2.
Earlier, the Ministry of Finance reported that Ukraine would not make payments on government derivatives, the amount of which as of April 30 amounted to USD 665.4 million.
In August 2024, the Cabinet of Ministers decided to temporarily suspend payments on obligations under government derivatives of 2015 (GDP warrants) from May 31, 2025, until the transaction (deed) with them is carried out.
In October 2015, the owners of 13 out of 14 issues of sovereign and state-guaranteed Eurobonds for a total amount of USD 14.36 billion and EUR 0.6 billion supported their restructuring.
During the restructuring, Ukraine issued GDP warrants for the amount of Eurobonds written off by creditors.
Under the terms of the issue, investors claim a share of the increase in real GDP (taking into account inflation) that exceeds 3% in 2019-2038, provided that nominal GDP (excluding inflation) exceeds USD 125.4 billion.
The initiator of the issue was the then Minister of Finance of Ukraine, Natalia Yaresko.
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