Russia sues Ukraine over USD 3 bln debt

The Russian government filed a lawsuit against Ukraine in the High Court of London on Feb. 17, demanding the repayment of USD 3 bln in overdue debt, Finance Minister Anton Siluanov reported  the same day, according to the ria.ru news site. Siluanov stressed the lawsuit was preceded by fruitless attempts to bring Ukraine to “constructive dialogue on restructuring”.

Ukraine’s USD 3 bln Eurobonds, issued for two years in December 2013, were fully bought by a Russian state fund. The fund was the only holdout in the restructuring of all Ukrainian sovereign Eurobonds, completed in November 2015. The Russian government claimed that the holder of the USD 3 bln Eurobonds is an official lender to Ukraine, which deserves preferential treatment, compared to commercial lenders who agreed to the restructuring. The Ukrainian MinFin claimed it cannot offer any better restructuring conditions to the holdout, as preferences would violate the reached agreement with other bold holders.

As of today, Ukraine owes USD 3,000 mln in principal and USD 75 bln in coupon on “Russian” bond.

Alexander Paraschiy: This is actually what we expected – there was little chance that the sides would be able to work together. Ukraine’s minimum goal in the court will be to prove that its agreement with other holders of Eurobonds does not allow it to offer any better conditions to the holdout lender. Its best case scenario would be to prove that the holder of this Eurobond is not an official lender to Ukraine, and thus it cannot be treated preferably, by definition. The timing of the court hearing is hard to predict, though we believe it will happen this year.