The United States is thinking of writing off Ukraine’s external debt by paying it off with assets taken from Russia
Against the background of the ongoing war, the Ukrainian authorities are studying the possibility of restructuring the external debt.
Bloomberg writes about this with reference to the words of three sources familiar with the discussion.
According to two agency sources, various scenarios are being considered, and a decision is not expected until the end of the summer. Ukraine has until at least September 1 to repay $1,4 billion in debt and interest, according to Bloomberg calculations.
The International Monetary Fund is offering advice and analysis of Ukraine's financial and debt situation, two sources said. According to the interlocutors, one of the options that Ukraine is considering involves the so-called consent procedure - the issuer's request for the approval of bondholders to change the terms of issued securities.
Another option involves using Russia's frozen assets as collateral, although the legal viability of such an idea is unclear, the sources said.
According to Bloomberg journalists, the negotiations highlight the Ukrainian government's desire to remain on good terms with global investors, in particular in order to be able to finance the country's reconstruction after the war. For issuers, failure to make payments on international bonds risks losing access to global debt markets for years to come.
Restructuring Ukraine's bonds as a way to reduce its debt burden will help ensure that funding from major allies for defense and humanitarian aid is not diverted to pay out bondholders, the newspaper notes.
In early May, the White House announced that the United States was ready to discuss writing off Ukraine’s external debt.
Let us remind you that according to forecasts of the International Monetary Fund, Ukraine’s economy will fall by at least 35% this year amid the war.