Investors holding Ukraine’s bonds valued at $20 billion are taking steps to establish a creditors’ committee, as reported by Reuters. This committee aims to facilitate negotiations with Kyiv regarding the restructuring of the debt.
The formation of this association is seen as a crucial move to formalize discussions between private bondholders and Ukraine. Talks have been ongoing since the fall of 2023 but have so far remained informal. With the establishment of a formal group, negotiations are expected to gain momentum, potentially commencing ahead of the International Monetary Fund’s spring meetings scheduled to begin on April 17 in Washington.
Sources suggest that Ukraine’s debt management office has been actively engaging with investors to encourage them to organize as a creditor group. It is anticipated that the committee will comprise between eight to 12 major asset management firms representing the bondholders.
Since the commencement of the full-scale invasion, Ukraine’s state debt has undergone significant expansion. In local currency terms, it has doubled, amounting to 2.758 trillion Ukrainian Hryvnia, while in foreign exchange terms, it has surged by 55%, reaching $51.6 billion. This substantial increase in state debt primarily stems from the acquisition of external official concessional loans from entities such as the European Union, various governments worldwide, and international financial organizations.
To manage this burgeoning debt, part of Ukraine’s external debt has undergone restructuring. Agreements have been reached with official creditors from the G7 and the Paris Club, extending until the conclusion of March 2027. Similarly, arrangements with commercial creditors have been made, stretching until August 2024.
Presently, negotiations are ongoing to further extend the restructuring period until 2027. This extension aims to alleviate the burden on the national budget and mitigate associated debt risks.
It was previously reported that Ukraine’s state debt had increased by a third by the end of 2023, underscoring the significant financial obligations owed by the country to its creditors.