Sunday, June 22, 2014

Ukraine Holds Talks With Creditors About Possible Debt Restructuring


Fri., June 20, 2014
Ukraine's government held informal talks with private bondholders about the possibility of extending the maturities of its debt to help buy the country breathing room to repair its economy, a top banking industry group said Thursday, The Wall Street Journal reported. Lubomir Mitov, a senior economist with the Institute of International Finance, said the discussions were an exploration to determine what type of bond restructuring might be possible if Ukraine's economic crisis worsened. "No decision has been taken, there are no numbers or framework," he said. "But what they're looking at is if there is any scope for some sort of voluntary bond exchange for maturity extensions." The IIF represents over 450 of the world's largest banks, hedge funds, pension funds and other private financial firms. To be sure, no debt restructuring is planned or being negotiated, Mr. Mitov said in an interview. That is partly because it isn't yet clear whether Ukraine will need a reprofiling of its debt: the International Monetary Fund and Kiev are still assessing the extent of the repairs needed to fix the country's economy. Still, the mention of restructuring Thursday encouraged investors to reduce their exposure to Ukrainian debt, even if any deal would be voluntary, said Timothy Ash, an analyst at Standard Bank in London. "The initial IMF deal bought a bit of time and made people assume that they could avoid it," He said, "But a debt restructuring was always logical."

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