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Discussions in the past few months between representatives of the City of Kyiv and an ad hoc committee of creditors holding Notes (AHC) with participation of representatives of the Ministry of Finance of Ukraine did not result in agreement on the terms of a debt restructuring operation, according to a posting on the ministry's website.
It is noted that the City of Kyiv and the Finance Ministry believe that the last offer made to the AHC represented a fair and reasonable compromise, which, however, was not supported by the AHC.
Yesterday, Kyiv's City Council approved the heads of terms for an exchange of its outstanding $550 million loan participation notes due 2015 and 2016 (the Notes) for new sovereign bonds (after a principal haircut of 25%) for $412.5 million in aggregate principal amount of Ukrainian sovereign bonds due 2019 and 2020 (the New Bonds).
The Finance Ministry also authorized the heads of terms of the exchange, and its support for the Kyiv City Council in the process to perform the proposed exchange, according to the statement.
It is also reported that the Kyiv City Council anticipates that a formal debt restructuring operation on the above terms will be launched in the coming weeks.
As UNIAN reported earlier, on October 8, the Kyiv City Council announced it would introduce a temporary moratorium on the city's external debt payments to be effective as of November 6. As part of this decision, the Kyiv City Council suspended debt payments under two loans totaling $550 million, attracted in 2005 and 2011 through the placement of eurobonds.
On November 5, the Kyiv City Council approved the heads of terms for an exchange of its outstanding $550 million loan participation notes for new sovereign bonds due 2019 and 2020 and state derivatives under the conditions specified by the Ukrainian government.
The New Bonds will be distributed among the exchanging holders of Notes, who will take part in Kyiv's debt transaction subject to the 25% principal haircut on their Notes. The New Bonds will have a coupon of 7.75% per annum.