Ukraine Makes Crunch Bond Payment, Staving off Default
Ukraine on Friday made a crucial Eurobond interest payment that kept the war-torn country from slipping into technical default and potential isolation from global credit markets.
Two sources close to the situation told Agence France Presse that money to cover the $120 million (110 million euro) payment was transferred as soon as business hours opened in Kiev. The $2.6 billion note matures in July 2017.
The cash-strapped former Soviet nation now has two more months to negotiate a debt restructuring deal before it faces a tougher deadline to pay more than $500 million on another Eurobond.
Franklin Templeton and three other U.S. financial titans own about two-thirds of the debt upon which Ukraine is trying to find savings of $15.3 billion (13.7 billion euros) over the coming four years.
That target is part of a $40 billion global package the International Monetary Fund patched up to help Ukraine weather an economic implosion that was exasperated by the pro-Russian revolt in its industrial east.
The IMF signalled on Thursday that it could release $1.7 billion in fresh bailout funds next week even if Ukraine fails to reach the private sector debt relief deal.
But some analysts called the very fact that Ukraine made Friday's payment an indication of Kiev's talks with the U.S. giants proceeding smoothly after more than three months of delay.
"If there was no progress in the negotiations, we would have not payed the coupon so easily," Dragon Capital investment firm analyst Sergiy Fursa said in a research note.
Ukrainian Finance Minister Natalie Jaresko has repeatedly threatened to impose a debt repayment moratorium as early as Friday should the bondholders fail to take a more compromising stand toward Kiev during talks now underway Washington.
Source: Agence France Presse
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