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Ukraine warns creditors as debt restructuring looms — The Wall Street Journal

Ukrainian Finance Minister Natalie Jaresko warns the holders of Ukrainian eurobonds that if they don’t enter serious talks on the restructuring of Ukraine’s debt soon, they «face the risks of an uncertain economic, political and military climate down the road,» The Wall Street Journal wrote on April 14.

«They’re misunderstanding, first of all, the depth of the economic-financial distress that the country is in today,» Jaresko told The Wall Street Journal.

In case the situation in Ukraine worsens, creditors «face the risks of an uncertain economic, political and military climate down the road.»

«That’s one of those risks that creditors ought to be taking into account,» she said.

«We’re not moving forward with discussions as fast as I had hoped,» she added.

According to Jaresko, she has had constructive talks with individual creditors but can only negotiate effectively on restructuring the debt with a clearly defined group.

«She dismissed a proposal put forward recently by a group of creditors that includes Franklin Templeton Investments, the largest private holder of Ukraine’s debt. In an opening salvo before restructuring talks, the group is asking for an extension of the debt’s maturity that doesn’t include ‘principal debt reductions.’ But Ms. Jaresko, who says she hasn’t been informed of the composition of the group, says an extension of the maturity won’t be enough to achieve IMF-mandated targets without a reduction in interest rates and the nominal value of the obligations,» The Wall Street Journal wrote.

Ukraine’s Finance Ministry on March 13 launched consultations with creditors on the restructuring of Ukraine’s foreign debt and the talks are to be completed by the end of May to secure the next tranche of the IMF’s loan.

Ukraine formally offered coupon reduction, principal debt reduction and a maturity extension to the holders of its bonds. Some creditors suggested a deferred repayment model, while Russia refrained from participating in the talks.

What is more, Ukraine is separately holding talks to extend the maturity of state-run Ukreximbank’s bonds. However, the bank hasn’t secured the required number of bond holders’ votes to prolong the deadline of the principal debt of its bonds by three months, and a new meeting of the creditors is scheduled for April 27.

(c) WILLIAM MAULDIN, WSJ.COM

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