Ukraine

In a related story, Bloomberg News reported that a committee of credit-default swaps traders said that Ukraine’s decision to freeze bond payments may trigger payouts on contracts insuring against losses on the country’s debt. The ruling is the first step toward a so-called credit event that would allow the settlement of about $396 million of the derivatives contracts, the International Swaps & Derivatives Association said on its website Wednesday. Ukraine would have to actually miss the payment before any final decision is made, the group said.

Ukraine’s central bank declared a top 10 bank insolvent that is majority-owned by multimillionaire Kostyantyn Zhevago and where his London-listed Ferrexpo – the nation’s largest pellet exporter – has $174 million, or 62 percent, of its deposits, the Kyiv Post reported. At close of business on Sept. 17, the National Bank of Ukraine took the bank, the nation’s 10th largest by assets, into receivership after Zhevago failed to contribute liquidity, mainly by not repaying related-party loans to the bank by selling his non-core assets.

Ukraine’s parliament on Thursday approved an $18bn debt restructuring deal despite fears that a populist backlash against the proposals would jeopardise the vote, in turn plunging the war-torn and recession-battered country into an imminent default and deep political crisis, the Financial Times reported. A comfortable majority of MPs supported a package of measures sanctioning the debt deal, including a 20 per cent “haircut” or writedown for creditors.

The Ukrainian government has registered a package consisting of three draft laws required for the successful finishing the restructuring of the country' foreign commercial debt to the Ukrainian parliament and a draft resolution on the provision of financial stabilization as a part of the implementation of the Extended Fund Facility program (EFF) of the International Monetary Fund (IMF) for Ukraine, according to a posting on the parliament's website, the Ukraine news agency Interfax reported.

The holders of Ukrainian Eurobonds maturing in September and October say they considering the restructuring deal between Ukraine and the group of creditors unfair. They are concerned about the extension of the repayment deadline, RT.com reported. "Our clients consider this approach unfair, because it would defer the average maturity by more than eight years for the existing bonds due 2015 and only half a year for the existing bonds due 2023," Reuters quotes US law firm Shearman & Sterling that represents a group holding bonds issued under UK law.

Ukraine and its main creditors agreed on Thursday to restructure $18 billion of the country’s foreign debt, in a rare deal between bond funds and a wobbly, emerging-market government, the International New York Times reported. If the deal is approved by the Parliament of Ukraine, it would write off 20 percent of the nation’s foreign debt, helping to avoid a drawn-out, Greek-style negotiation with large bondholders. The terms would also offer financial relief to Ukraine during a deep recession and an armed conflict with pro-Russia separatists.

PrivatBank could finally make a breakthrough with its creditors after a minority holdout group of investors that has previously blocked the Ukrainian lender's attempts to restructure its debts said it will agree to the latest set of proposals, Reuters reported. "We will now support this latest consent solicitation," said Daniel Freifeld, founder of Washington-based Callaway Capital Management, an asset manager that heads the creditor committee. The struggles to get the restructuring over the line at the systemically important bank are a microcosm of the challenges facing Ukraine.

Ukraine’s government is nearing a restructuring deal with its creditors that would call for a 20% reduction in the value of the country’s bonds, marking a possible breakthrough in negotiations that have been deadlocked for months, according to people familiar with the matter, The Wall Street Journal reported. Since March, the Ukrainian government has been locked in tense restructuring talks with a group of creditors who hold almost half the country’s outstanding debt.

Ukraine is preparing to meet international creditors in San Francisco this week as the war-torn country warns it is prepared to impose a debt moratorium in September unless a restructuring deal is struck, the Financial Times reported. According to Ukraine’s Ministry of Finance, the meeting on Wednesday represents the last opportunity for the two sides to reach full agreement in advance of a $500m bond due to mature on September 23.

Ukraine’s Eurobonds slid the most in two months as renewed signs of discord between the nation and a Franklin Templeton-led creditor group increased the likelihood of default. The sovereign’s $2.6 billion of debt due July 2017 fell 1.31 cents to 55.44 cents on the dollar at 5:28 p.m. in Kiev, the biggest drop since details emerged on June 11 that Ukraine was asking for a 40 percent writedown on principal.