It's one of the speediest and largest sovereign debt restructurings in recent times. As Ukraine launches the next counter-offensive against Russia, ...
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| | Top News  Getty Images It's one of the speediest and largest sovereign debt restructurings in recent times. As Ukraine launches the next counter-offensive against Russia, the country has worked out a new deal that will result in relief for its more than $20B in international bonds. "This is an important step on Ukraine's path to restoring long-term economic stability and will enable our swifter re-entry to international markets once the security situation improves," according to Finance Minister Serhiy Marchenko.
Backdrop: The last time Ukraine restructured its sovereign debt was in 2015, which came shortly after Russia's annexation of Crimea. Following a full-scale invasion in early 2022, bondholders granted a two-year suspension on payments, but it has not been enough as the attacks continue on cities and infrastructure. Expenses have not only ballooned for financing Ukrainian defense, triggering broader discussions in recent months about a potential haircut and other support mechanisms.
This time around, bondholders agreed to accept nominal losses of 37% on their holdings, relinquishing $8.7B of claims. The agreement also lowers interest rates and postpones due dates for bonds, which Ukraine forecasts will save its economy $11.4B over the next three years. Elsewhere, the IMF is scheduled to meet Ukrainian officials next week to decide on loan disbursements tied to its budget outlook, while GDP warrants with other debt holders are likely to be renegotiated.
Outlook: Ukraine has raised a total of $90B to fund its war effort since 2022, but is looking for more financial help as it faces a budget deficit of $43B in 2024 and $35B in 2025. The U.S. has been one of the nation's biggest contributors over the past two years, allocating $175B in support for the country. Of the total amount approved by Congress, $117.4B has gone towards military, security and weapons assistance, with the remaining $57.4B earmarked for budgetary funding, economic assistance, and humanitarian aid. | | Featured  Want to get more from investing efforts? Take our world-class Premium service for a test drive. Sign up now, and you can try all of Premium's powerful tools and resources: - Our proprietary Quant ratings, plus ratings from Wall St. and analysts on Seeking Alpha
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