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LONDON, April 23 (Reuters) - Kazakhstan's BTA Bank, majority owned by the country's sovereign wealth fund, on Monday said it was suspending payment on recovery notes with a reference value of $5.2 billion after defaulting on a $2 billion dollar bond earlier this year.
The Recovery notes were issued to some creditors during an earlier debt restructuring in 2009 and were supposed to pay out whenever BTA managed a certain level of asset recovery.
BTA said in a statement that suspension of payments was in the best interest of creditors.
"It would not be appropriate to make payments in respect of the Recovery Units when BTA has not paid amounts due on the Bank's Senior Notes and while discussions continue with stakeholders on the financial restructuring of the Bank," the bank said in a statement.
BTA has formed a steering committee to enable talks on a second debt restructuring.
One investor who holds recovery notes said that in normal circumstances suspending payments would allow creditors to force early repayment on all the debt. But he added it was likely the biggest holders of the RNs who sit on the restructuring committee had agreed this would not happen.
The defaulted 2018 dollar bond was trading at just over 21 cents on the dollar. The recovery notes were trading on 9-1/2 cents on the dollar. (Reporting by Carolyn Cohn and Sujata Rao)