“Final talks” on Ukraine debt operation to continue today, sources say

Talks between Ukrainian Finance Minister Natalie Jaresko and representatives of the ad hoc creditors committee, which started in San Francisco yesterday, will continue today on Aug. 13, Bloomberg reported, citing anonymous sources. Recall, Ukraine’s MinFin scheduled a meeting for Aug. 12 and stressed that failure to reach any deal by the end of this week might prompt Ukraine to implement “alternative options”, possibly the introduction of a debt moratorium. With these talks, Ukraine is seeking to agree on restructuring parameters of about USD 19.7 bln in state and state-guaranteed debt, including USD 16.2 bln in government Eurobonds. 

Alexander Paraschiy: The continuation of talks, in our view, suggests the sides still see a tangible possibility to find common ground by the end of this week. At this stage, the risk of the introduction of a debt repayment moratorium looks smaller. Given the time constraints (with 41 days left to maturity for Ukraine’s nearest Eurobond, worth USD 0.5 bln), the Ukrainian government should 1) either issue a consent solicitation for the bond in the coming days (with agreed restructuring parameters, or with a request to postpone maturity by a couple of months), or 2) announce a debt repayment moratorium and restart the debt talks from scratch. We still believe in a peaceful solution, with the bond restructuring parameters to contain a small haircut.