November 12, 2015 / 7:17 PM / 3 years ago

Ukraine completes debt restructuring of around $15 billion

Ukraine's President Petro Poroshenko speaks during a news conference with European Union foreign policy chief Federica Mogherini in Kiev, Ukraine, November 9, 2015. REUTERS/Gleb Garanich

KIEV (Reuters) - Ukraine’s Finance Ministry announced on Thursday it had completed a debt restructuring of around $15 billion with creditors and said it remained open to finding a debt solution on a $3 billion Eurobond with Russia.

The country earlier this year received a $40 billion bailout package arranged by the International Monetary Fund, the terms of which required private bondholders to contribute $15.2 billion.

“The successful conclusion of our debt restructuring process, completed while avoiding default, leaves Ukraine’s economy in a much stronger position and is an important prerequisite for our return to growth,” Finance Minister Natalia Yaresko was quoted as saying in a statement.

A Eurobond held entirely by Russia is included in the 14 sovereign and sovereign-guaranteed bonds Kiev is restructuring, but the Kremlin has refused to participate in the process, arguing the debt has the status of an official loan as opposed to a commercial one.

“Ukraine regrets that holders of such Eurobond have decided not to support Ukraine’s essential debt operation, but within the contractual constraints in which it must operate the government of Ukraine remains open to finding a solution with the holders of the December 2015 Eurobond,” the ministry said.

It said holdouts from the deal have 150 days to participate in the swap. After that they lose their right to receive the new securities.

Ukraine’s other bondholders, led by Franklin Templeton, accepted a 20 percent principal writedown, a coupon increase to 7.75 percent, a four-year maturity extension and GDP warrants - additional annual payments linked to Ukraine’s future economic growth.

The issues will officially start trading and enter benchmark bond indexes on Friday, but traders said the bonds were already trading in the so-called grey market on Thursday with sub-9 percent yields.

Reporting by Alessandra Prentice, editing by Larry King

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