Ukraine announces halt to foreign debt servicing amid restructuring deal

Ukraine announces halt to foreign debt servicing amid restructuring dealThe Cabinet of Ministers has announced the launch of restructuring of Ukraine's public debt planned to be completed by December 1, 2015, and suspended debt servicing payments, according to a government resolution published on its website.

In addition, the Cabinet ordered the Finance Ministry to send a formal proposal with the terms of restructuring to the creditors and thereafter provide the government with draft acts specifying the terms of exchange, issue and sale of obligations of the state and state derivatives.

What is more, the State Treasury Service was tasked to suspend all the transactions involving the budget funds allocated for servicing and repaying the restructured obligations.

On August 27 the Ukrainian government reached an agreement with the creditors' committee on restructuring part of the public debt totaling $18 billion. The restructuring involves a write-off of $3.6 billion, deferral of principal payments in the amount of $11.5 billion for four years, as well as setting a coupon rate under all bonds at 7.75% per annum.

On September 17, the Verkhovna Rada secured the constitutional majority to give the green light to a package of bills drafted by the Ukrainian government on the restructuring of Ukraine's sovereign debt.

On September 18, President of Ukraine Petro Poroshenko signed a package of government-prepared laws stipulating the procedure of restructuring Ukraine's sovereign debt. According to these laws, the Finance Ministry will start exchanging the restructured bonds for new ones, and will stop servicing the old bonds.

Source: UNIAN
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