Ukraine and international creditors can agree on the remission of the 20% of the debt

Ukraine and international creditors can agree on the remission of the 20% of the debt

According to the majority of investment analysts, the creditors` committee and Ukrainian government can make term with each other within a framework of negotiations about restructuring of Eurobonds

Creditors committee and Ukrainian government can make terms with each other within a framework of negotiations about restructuring of Eurobonds, and as a result they will reach the agreement of a total remission of 20% of the debt, thinks the majority of analysts of Ukrainian investment companies.

“Criteria of the IMF substantially limit the opportunities of Ukraine to accept the deal with a minor remission. That`s why, even if parties will get close to the deal, it is more likely that the position of creditors will move out to the position of Ukraine” – thinks Andrew Mateny the analyst of Goldman Suchs.

At the same time, the expert is skeptical about the agreement of restructuring, which may be announced in the nearest future, considering that only few weeks earlier, creditors were ready to agree on remission of more than 5% of the main debt, when Ukraine continued to insist on remission of 40% of nominal.

According to the estimations of Alexander Golynskiy, the analyst of Sberbank CIB , the parties will be able to agree on remission 25-30% of nominal. At the same time, the analyst thinks that remission of more than 35% or less than 20% will be hardly probable.

As for the warrant, at its basic scenario, the expert suggests that the rate will not exceed 5,55% per annum, and after that increases to 7,8 – 8,5%. Apart from that, he is sure that Ukraine is going to make payment of the interest income equal to $60 mln in Eurobonds, with amortization in 2021.

“Ukraine is oriented on making the agreement with all private creditors till September 23rd.  Consequently, for not to complicate the process of restructuring, the country will serve its current engagements within the given timeframe” – said Alexander Golynskiy.

Alexander Valchishen, the manager of analyst department of ICU, is aligned with the previous experts, and thinks that agreement will include remission of 25% of debt nominal. Along with that, expert thinks, that interest rate of the new securities will be less than 4,5% per annum.

Dmitriy Petrov, the analyst of Nomura, expects that the future debt operation is going to include the immediate remission of 15% per annum form the main debt and warrant on the level of 2% per annum till 2020, and after that it will increase to 7% per annum. Apart from that, securities payments will be made from 2020 till 2026.

Experts point out that starting from the August 19th Ukraine is under the time pressure for conclusion of all juridical procedures for restructuring until September 23rd  - the deadline of Eurobond transaction amortization of $500 mln.  

“Usually it requires 3 weeks to call a meeting of bond holders and two more weeks  for repeat meeting in case of absence of the quorum on the first one” – explained Fyodor Bagnenko,  the trader of Dragon Capital company.

 According to the Igor Umanskiy, the deputy finance minister, Natalya Yaresko, the head of MOF, returned from the latest negotiations in Dan-Francisco and currently Kyiv continues to carry the negotiations with the creditors` committee telephonically, but basically using the Skype.

MOF announced that the last official information about the course of negotiations is dated August 14th, and according to it the negotiations are in progress. The administration also didn’t comment on forthcoming of the next warrant payment in Eurobonds, total sum of which is $60 mln.

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