Almost all holders of Ukraine’s GDP-linked warrants have approved their full exchange into conventional sovereign eurobonds. The exchange covers 99.06% of warrants outstanding, with a total notional value of $2.635 billion. The decision was confirmed in an official stock exchange notice published by Ukraine on Thursday. In effect, investors have agreed to the complete retirement of GDP warrants as a separate debt instrument.
Ukraine’s Ministry of Finance described the voting outcome as critically important for the country. According to the ministry, the transaction strengthens macroeconomic stability and public debt sustainability by removing the risk of large and unpredictable payments during the post-war recovery period. The resources freed up will allow the state to finance defense needs amid Russia’s ongoing full-scale aggression.
Under the approved terms, Ukraine will convert virtually the entire outstanding volume of GDP warrants into a new class of eurobonds—Series C bonds maturing in 2032. The exchange is carried out at a ratio of 1.34, resulting in a nominal amount of approximately $3.5 billion in new securities. A small portion of the warrants will be exchanged into Series B bonds issued as part of last year’s restructuring, with maturities in 2030 and 2034, each totaling about $16.9 million.
Redemption of the new Series C bonds will be staggered over several years. Ukraine will repay 45% of the principal on February 1, 2030, and another 45% on February 1, 2031, with the remaining 10% due on February 1, 2032. The interest rate will step up over time: 4% per annum from issuance until February 2027, then 5.5% until August 2029, and 7.25% per annum until final maturity.
In addition to the securities exchange, Ukraine will pay investors an additional cash consideration. This amount will not exceed 7% of the exchange value. Previously, the Cabinet of Ministers set a cap of $52.7 million on the exchange fee itself, while the total compensation—including consent and outcome fees—will amount to $129.56 million.
As part of the transaction, the state will also cancel GDP warrants with a notional value of $604.26 million that were held by Ukraine. At the same time, warrants worth $43.84 million held by the National Bank of Ukraine will participate in the exchange on standard terms. As a result, GDP warrants will be fully removed from circulation.
The Ministry of Finance estimates that without restructuring, payments on GDP warrants between 2025 and 2041 could have ranged from $6 billion to $20 billion, depending on economic growth rates. This uncertainty was inherent in the instrument’s design, as after 2025 payments were uncapped and directly linked to real GDP growth. The mechanism offered no protection against economic downturns followed by sharp rebounds, which could have formally triggered massive payments misaligned with the economy’s actual condition.
Under the warrant terms, payments were triggered if annual real GDP growth exceeded 3%. For growth between 3% and 4%, investors received 15% of the incremental increase, while growth above 4% triggered payments equal to 40% of the excess. Following a nearly 30% economic contraction in 2022 due to Russia’s full-scale invasion, GDP growth of 5.3% in 2023 formally generated a payment claim of $643 million, despite the fact that the country’s economic situation had not meaningfully improved. This amount has been fully settled under the current agreement.
Finance Minister Serhii Marchenko emphasized that the restructuring will allow Ukraine to save billions of dollars during the post-war recovery period. According to him, converting GDP warrants into standard debt instruments makes public finances more predictable and reduces long-term volatility. He described GDP warrants as a toxic instrument that created serious fiscal risks and could have jeopardized the country’s recovery and reconstruction.
Marchenko also noted that completion of the deal helps Ukraine meet the debt benchmarks set under the International Monetary Fund program and aligns with the expectations of the country’s bilateral partners within the Group of Official Creditors of Ukraine.
Government Commissioner for Public Debt Management Yurii Butsa said that following the positive vote on Ukraine’s proposal announced on December 1, the restructuring process has moved into its final settlement phase. The settlements are expected to take place in the coming days and be fully completed by the end of the year.
