2 December 2011
Ukraine has extended the outstanding USD 2.0 bln VTB loan maturing in the coming weeks for another six months, according to the Finance Ministry. No further details were disclosed by the ministry. PM Mykola Azarov said Ukraine had sought to repackage the loan into a longer-term Eurobond, while Russia apparently favoured another 6-month extension. Svetlana Rekrut: We expect the government to seek further debt roll over in June 2012, potentially as part of a broader package of political and economic arrangements with Russia, including gas import terms. Ukraine’s external debt redemptions and interest payments in 2012 are now estimated at USD 4.7 bln (2.6% of projected GDP), net of the scheduled repayment of IMF debt of USD 3.8 bln (2.1% of GDP). Subject to improvement in the global public debt market, we think Ukraine will not face problems is rolling over its maturing obligations via new Eurobonds next year. However, should the current debt market jitters persist, Ukraine will be forced to tap bilateral loans from other governments or IFIs.