July 27, 2015 / 12:11 PM / 5 years ago

UPDATE 2-Ukraine puts new debt restructuring proposals to creditors - minister

* Kiev has been pressing for writedown in debt principal

* Ukraine seeking savings of $15.3 billion

* New proposals by Kiev to creditors not disclosed (Adds background)

By Natalia Zinets

KIEV, July 27 (Reuters) - Heavily indebted Ukraine has made new proposals to its creditors for restructuring $23 billion of foreign debt and is now awaiting their response, Finance Minister Natalia Yaresko said on Monday.

She declined to give reporters any details of the proposals.

Ukraine, whose economic plight is exacerbated by a draining conflict with Russian-backed separatists in the east of the country, is seeking a deal on its debt to make savings of $15.3 billion in the coming four years.

Restructuring negotiations have dragged on for over four months because of disagreement over the need for a writedown on the principal of the bonds as requested by Kiev. The government has threatened to invoke a moratorium on debt repayments if it does not get satisfaction.

“We are waiting for a reaction from creditors to the newest proposals which we have transferred to them,” Yaresko said. “I think there should be new negotiations this week.”

It was not known if Kiev’s new proposals included a retreat from the demand for a “haircut” (reduction) of up to 40 percent that it has pressed for.

The bondholder committee led by U.S. financial giants including Franklin Templeton have opposed a “haircut” and maintained that maturity extensions and coupon reductions will be enough for the Kiev government to make the necessary savings.

Earlier on Monday, Yaresko told a ministry meeting attended by Prime Minister Arseny Yatseniuk that she felt sure a deal would be reached.

She also said she expected a deal to be tied up with creditors on July 30 to restructure the Eurobonds of state-owned Oschadbank as part of the broader $40 billion International Monetary fund-led programme to restructure Ukraine’s sovereign and quasi-sovereign debt.

Despite the bleak state of its finances, Ukraine made a crucial Eurobond coupon payment of $120 million last Friday to avoid technical default, though it has more repayment deadlines looming in August and September.

Ratings agency Moody’s on Monday said that there was still “an imminent risk” of a Ukrainian moratorium even though Ukraine had met the July 24 interest payment. It added however that Kiev and the creditors could find “common ground” before September.

The IMF has brought relief to Ukraine by saying it will disburse $1.7 billion in fresh funds under a $17.5 bailout package irrespective of a restructuring deal being reached.

Ukraine expects the IMF board of directors to make its decision on July 31.

Writing by Richard Balmforth; Editing by Tom Heneghan

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