Ukraine debt restructuring talks extend for another day

Ukraine’s Finance Ministry issued a brief joint statement with the ad hoc creditors committee on Aug. 14, stating that they held “detailed discussions in San Francisco” and that “the talks are ongoing”. Ukrainian Finance Minister Natalie Jaresko launched the talks on Aug. 12 with the goal of restructuring the parameters of about USD 19.7 bln in state and state-guaranteed debt. Last week, the Finance Ministry stressed that failure to reach a deal by the end of this week might prompt Ukraine to pursue “alternative options,” possibly a debt moratorium.

Alexander Paraschiy: As in our comment yesterday, we believe that the mere fact that talks are ongoing is a good sign that the parties see a real chance to reach common ground. Among the three possible scenarios – 1) a prompt agreement on a debt operation, 2) postponement of talks for a later time with a request to extend the maturity of Ukraine’s Sept. 23 Eurobond, and 3) the introduction of a debt moratorium and starting talks from scratch – we see the best probability for the first scenario.