Ukraine crunch debt talks move into second day
Two people close to the discussions told AFP that no deal was reached Wednesday when Ukrainian Finance Minister Natalie Jaresko met top debt representatives of the Franklin Templeton investment giant in San Francisco.
Templeton and three other financial titans hold two-thirds of the $15.3 billion in savings that Ukraine is seeking on its total foreign debt over the coming four years.
They have refused to accept any major reduction to their bonds’ value and want a proposed maturity extension to expire as soon as Ukraine’s imploding economy returns to growth.
Sources said the bondholders have put strict conditions on a proposed write-down of between five and 10 percent — well bellow the 40 percent figure originally sought by Kiev.
Ukraine is due to make a $60 million (54 million euro) Eurobond interest payment on August 23.
But it faces the much larger hurdle of covering $500 million in principal that matures on September 23.
The pro-Western government that emerged in the wake of the bloody ouster of a Moscow-backed leadership has signalled repeated plans to impose a potentially devastating debt moratorium if no solution is reached within days.
“Time is running out,” one source said ahead of the negotiations.
“There is a clause written into the September 23 repayment which states that any changes to the payment must be approved by the bondholders at least 21 days before the payment is due,” the person told AFP.
A $40 billion IMF-led rescue programme requires Ukraine to restructure $15.3 billion in order to keep down its debt-to-growth ratio and be able to tap into foreign money markets by the end of 2017.
An agreement with the California creditors could open the door to similar deals being struck with the other three members of the Ad-hoc Committee of Noteholders to Ukraine.
But Kiev must also find a compromise with several additional bondholders who are negotiating on their own.
All these arrangements must be signed by September 2 in order to keep Ukraine from entering a so-called “hard default” that could potentially shut it out of global borrowing markets for years to come.