June 19, 2014 / 3:55 PM / 5 years ago

Ukraine in talks with creditors on possible debt restructure- IIF

WASHINGTON, June 19 (Reuters) - Ukraine is holding talks with creditors on restructuring its foreign currency debts, an official from an international finance association said on Thursday following recent meetings with Ukrainian officials.

Lubomir Mitov, an economist with the Institute of International Finance, said that while Ukraine’s finances were precarious, it was too soon to say whether it would need to change the terms of its debt.

Mitov said Ukrainian officials stressed they would avoid forcing any so-called haircuts on bondholders in a restructuring.

“The Ukrainians authorities made very clear to us that they would consider this only as a really, truly voluntary operation agreed by the bondholders,” Mitov told journalists by phone. “A voluntary exchange or maturity extension could be one of the sources for financing.”

The IIF, a trade group for international finance, said Mitov had recently visited Ukraine.

Ukraine’s economy is under severe pressure as the country struggles from what Russian President Vladimir Putin has described as a civil war. Militants in Eastern Ukraine are fighting for secession from the country.

Mitov said Ukraine is already in a deep recession that could shrink gross domestic product, a measure of total economic output, by 8-10 percent.

Still, he said Ukraine’s public finances will not be poor enough to necessitate a debt restructuring deal until at least next year. And even then, Kiev might not need a restructuring if it is able to return to capital markets to raise money, Mitov said.

“Nothing is decided yet but we know they are having some talks, preliminary talks, on this,” Mitov said. (Reporting by Jason Lange; Editing by Andrea Ricci)

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