Monday, July 27, 2015

Ukraine Avoids Default With $120 Million Interest Payment


Mon., July 27, 2015
Ukraine has staved off a default on its $70bn debt pile, rekindling hopes that Kiev can cut a deal with creditors to restructure a substantial proportion of its dues, the Financial Times reported. The cash-strapped eastern European country, which is in the midst of a deep recession and a separatist conflict against Russia-backed rebels, made a $120m interest payment due on Friday as part of its ongoing battle to convince creditors to write down the face value of their holdings. The government originally hoped to strike an agreement to restructure $15.3bn of debt before the summer. However months of negotiation failed to produce a deal and, in May, Ukraine’s parliament adopted a law that granted government the authority to halt debt repayments altogether. “It’s a positive sign but I probably wouldn’t get too carried away,” said Fyodor Bagnenko, a fixed income trader at Dragon Capital, which forecasts that Ukraine and its creditors will eventually compromise on a debt haircut of 20 per cent to 25 per cent.

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