Zelensky signed the law on the moratorium on the payment of foreign debt until October

President Volodymyr Zelenskyy signed Law No. 11396, which allows the government to suspend payments on foreign debt until October 1. This information made public on the website of the Verkhovna Rada.

The Parliament adopted the relevant draft law on July 18. In addition to the permission to suspend payments on the external debt, the document gives the government the opportunity to transfer the state-guaranteed debt of the former “Ukravtodor” to the state debt and carry out its restructuring. This applies to the 2021 series of Eurobonds for a total amount of $700 million plus interest.

The Ministry of Finance calls the adoption of this law a necessary technical decision that gives the government flexibility before reaching an agreement in principle on restructuring with the owners of the state and state-guaranteed external commercial debt of Ukraine.

Ukraine managed to reach an agreement in principle with the Committee of Eurobond Owners of Ukraine regarding debt restructuring. The creditors’ committee includes Amundi SA, BlackRock Inc, Amia Capital LLP and other investors, which together represent the owners of about 25% of the bonds.

According to the Ministry of Finance, the restructuring agreement provides for the exchange of existing Eurobonds for new Eurobonds with a nominal reduction in the value of the debt by 37% at the initial stage and a reduction in the net present value of the debt by about 60%.

After the restructuring is completed, the maturity of Eurobonds will be extended: the first repayment in the amount of $1.17 billion will take place in 2029. Without the restructuring, the principal amount of $9.38 billion (excluding capitalized interest) would have been due between 2024 and 2029.

This agreement will provide Ukraine with financial stability and the opportunity to focus on important domestic reforms and economic development.