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By Michael Turner
LONDON, March 20 (IFR) - The Republic of Ukraine has sent
out a request for proposals (RFP) to banks for a new US
government-guaranteed bond, according to three sources.
This is the second time the US government has thrown its
financial backing behind a Ukrainian international bond issue.
In May 2014, the US guaranteed a US$1bn Ukrainian bond
maturing in 2019 through the US Agency for International
That bond was given a credit rating in line with the US
sovereign at Aaa by Moody's, AA+ by Standard & Poor's and AAA by
This is a far cry from Ukraine's credit rating, which stands
at Caa3, CCC and CC with the same three agencies.
The RFP comes just over a week after Ukraine agreed a new
four-year US$17.5bn bailout facility with the International
As part of the IMF agreement several institutions -
including the European Union, World Bank and US - have agreed to
provide around US$7.5bn between them, according to analyst
estimates, to the war torn country.
It is not clear whether the US-backed bond forms part of the
Meanwhile, Ukraine is obligated under the IMF agreement to
restructure at least US$15.3bn of outstanding debt.
Ukraine's finance minister Natalia Yaresko confirmed during
an investor call last week that bondholders will see haircuts to
principal, as well as maturity extensions and changes to
Russia, which holds US$3bn of Ukrainian debt that comes due
in December this year, will not be exempt from the cuts, Yaresko
A clause in the debt owed to Russia allows it to accelerate
bond payments if Ukraine's debt-to-GDP ratio breaches 60% - a
number that has been passed largely because Ukraine's industrial
power centre Donbass has ground to a halt under sustained
conflict. Russia has repeatedly said that it would not
accelerate the debt.
(Reporting by Michael Turner; editing by Alex Chambers)