Ukraine reaches key agreement with creditors on restructuring of $23.3 billion of external debt.
Our perspective:In its previous publications, OTP Capital already predicted that Ukraine would avoid default on external obligations. And so it happened. In July, the government agreed on the basic terms of restructuring all OZDPs with a club of creditors representing about 20% of all owners. In order to successfully complete the restructuring procedure, it is necessary to obtain the consent of at least 66.67% of the holders of all issues of OZDP and the consent of more than 50% of the holders of each issue separately. The entire procedure for agreeing the restructuring terms should be completed by August 27. The main conditions are as follows:
- unconditional write-off of accumulated interest for the years 2022-2024 and write-off of 37% of the nominal value for all OZDP;
- balance exchange: $630 from each bond for new issues of OZDP series A and series B, each of which has its own defined maturity date and conditions regarding the size of coupons;
- possible additional payment in 2029 of accumulated but not paid coupon income until August 1, 2024, which is about $190. on the bond and up to 12% of the outstanding principal amount, up to USD 120. for each bond through the accrual of series B bonds maturing in 2035 and 2026, in the event that the nominal GDP of Ukraine in fiscal year 2028 exceeds the IMF forecast for this year by at least 3%;
- Ukraine will pay a “consent fee” in the restructuring in the amount of 12.5 dollars for each bond to each OZDP holder who has supported the terms of the restructuring within the established terms. The distribution of the exchange of each existing OZDP for shares of new OZDP is shown in the table (see below).
In this way, the government of Ukraine achieved its main goals:
- Avoided default and maintained the reputation of a reliable partner on the global capital market.
- Reduced debt obligations by a total of $11 billion. at the expense of unconditional write-off from the face value and downward revision of coupon payments for all existing OZDP.
- Postponed repayment from 2024-2028 to 2029-2036 – the new OZDP have the following repayment plan: $1.1 billion. – in 2029, 0.5 billion dollars. – in 2030, 5 billion dollars. – in 2034, 4.5 billion dollars. – in 2035, 3.8 billion dollars. – in 2036.
- Reduced coupon payments during 2024-2027 from 7.75% to 1.75%-4.5%.
Distribution of the exchange of existing OZDP for shares of new OZDP:
