REUTERS
The Ad-hoc Committee of Bondholders to Ukraine is not ready to accept a proposal from the Ukrainian government to write off part of the public debt in the framework of the negotiations on the restructuring of the country’s debt, according to the letter from the committee, published by the Financial Times on Wednesday.
"Along with the International Monetary Fund, the committee’s members have been long-term supporters of Ukraine, investing under successive governments, delivering capital to put in place vital infrastructure. We would like that to continue under the current president, who has been so successful at implementing reform.
“However, the committee believes taking a haircut on bonds is not the right way to achieve that. Ukraine’s problem is one of liquidity, rather than one tied to the level of debt. Our restructuring proposal meets all the IMF criteria and delivers $16 billion of interest and debt maturity relief — not far short of the $17 billion in new loans pledged by the IMF.
"A haircut sends the wrong signal to global capital markets when Ukraine can least afford to be shunned. Ukraine and its business community need access to finance to help spur recovery. That could be put at risk.
"Instead, the committee has crafted a proposal giving Ukraine ample time to recover. Bondholders only benefit once that recovery is secure. A key aspect of the plan includes a debt-for-equity swap, where coupons are only paid once gross domestic product reaches a certain level. The committee has gone out of its way to offer a proposal that is sympathetic, and delivers long-term benefit to all sides. We would like to see other creditors assume similar responsibility. Yet of the country’s $70 billion of debt, just $22 billion is proposed for restructuring. This should be about burden sharing, not burden shifting.
"The committee is determined to play its part in supporting Ukraine through its current plight, and is keen to negotiate a rapid resolution."