July 22 (UPI) — Ukraine reached an agreement with some of its creditors to restructure its external debt, according to officials on Monday.
Kyiv was facing an Aug. 1 deadline on its $23 billion debt payments that were frozen during the onset of Russia’s invasion of Ukraine.
“Today, we reached an agreement in principle with the committee of Eurobond holders,” Ukraine Prime Minister Denys Shmyhal said, according to the Kyiv Independence.
Olena Bilan, the chief economist at the Kyiv bank Dragon Capital, said the agreement in principle still needs to clear some final hurdles.
“To finalize the restructuring process, (the government) needs to get consent from the majority of bondholders,” Bilan said. “For this, the government will launch a formal voting process soon.”
The potential deal would have BlackRock, Amundi and AmiaCapital, among other creditors, exchange their current bonds for new ones, extending the debt.
“The deal will result in the savings on debt servicing of $11.4 billion over the next three years and $22.75 billion until 2033,” the Ukraine finance ministry said, according to Politico. “This will free up vital financial resources, which can be redirected towards defense and social spending.”
The deal would also allow Kyiv to pay only the interest through 2029. After that, it would have to begin writing off costs for Bond A, the first in a new series of bond, and then begin amoriitization for Bond B in 2020. Those series will continue to 2036.
Ukraine has struggled with its finances since the Russian invasion in February 2022, leaving some parts of the country in tatters with Moscow controlling swaths of the Ukraine.