The Government of Ukraine, advised by Rothschild & Co and White & Case as financial and legal advisors, respectively, has reported that, following private discussions between 12 -19 July 2024 with members of the creditor committee, advised by PJT Partners and Weil, Gotshal & Manges, it has reached agreement in principle with the committee on the key financial and non-financial terms of a proposed restructuring transaction in relation to Ukraine’s thirteen series of outstanding Eurobonds.
Ukraine also discussed the agreement in principle reached with the committee with a limited number of additional investors who indicated their support. The committee and the investors consist of a number of major institutional asset managers and other long-term investors in Ukraine representing around 25% of the outstanding amount of Ukraine’s Eurobonds.
The agreement has been confirmed by International Monetary Fund (IMF) staff as compatible with the debt sustainability objectives of Ukraine’s Extended Fund Facility (EFF), under the baseline macroeconomic framework of the fourth review dated 28 June 2024, taking into consideration the authorities’ overall restructuring strategy. The agreement has also been endorsed by the Group of Creditors of Ukraine.
Ukraine intends to launch the restructuring as soon as practicable, which will be implemented through an exchange offer and consent solicitation, whereby each series of Eurobonds will be exchanged for a package of new bonds consisting of one or more of A Bonds and B Bonds.
Ukraine intends to also restructure the outstanding Eurobonds issued by the State Agency for Restoration and Development of Infrastructure (Ukravtodor). The restructuring of the Ukravtodor Eurobonds will be on the same terms as the restructuring.
Analysis by Morgan Stanley notes that the deal, having been endorsed by the Group of Creditors of Ukraine appears to only need approval by the cabinet, not the parliament.
“Given that it takes time to complete all required documentation and the actual exchange, being done by early August before the grace period on UKRAIN 8.994 2026 seems unlikely,” the analysts observe. “Temporarily seeing a missed payment is thus likely, in line with parliament passing a bill last week entitling the government to introduce a moratorium on foreign debt until 1 October 2024. A settlement in early September thus seems likely, assuming the exchange does indeed pass.”
