REUTERS
Ukrainian Finance Minister Oleksandr Danyliuk has announced that the High Court of Justice in England will decide on Ukraine's $3 billion eurobond debt owed to the Russian Federation in April, according to TV Channel 112 Ukraine.
"A session was held to hear both sides. The judge should now take a decision, formalize it. I think we'll know the verdict in three months, perhaps as early as in April," he said, TV Channel 112 Ukraine reported.
According to Danyliuk, representatives of the Ukrainian side managed to convincingly prove their position.
As UNIAN news agency reported earlier, the court on January 19 conducted the final hearings on the Russian suit on Ukraine's debt.
Russia lodged a suit with the London High Court against Ukraine after it had defaulted in paying the principal amount and interest on a $3 billion loan. The fact that the bonds were purchased via the Irish Stock Exchange makes the disbursement a private creditor debt. However, the Russian side insisted that this was an interstate debt, as the buyer was the state-owned National Wealth Fund. Ukraine wanted the $3 billion eurobond to be restructured under sovereign and sovereign-guaranteed bonds, but Russia reiterated it did not consider the debt to be commercial.
In the course of negotiations, Russian authorities also insisted on better restructuring terms than those offered to other creditors, which is prohibited by the bond swap memorandum between Ukraine and the bond holders.
Ukraine restructured the debt under the International Monetary Fund's Extended Fund Facility program approved by the IMF Executive Directors in March last year. In December 2015, the IMF decided that the claim arising from the $3 billion eurobond issued by Ukraine on December 24, 2013, and held by Russia's National Wealth Fund, was an official claim for the purposes of the fund's policy on arrears to official bilateral creditors. At the same time, the fund revised its lending policy with respect to debtor countries with payment problems, including Ukraine, enabling the IMF to continue its lending program, even in the case of non-repayment of Russia's loan.
On December 18, following Russia's refusal to participate in the debt operation, Ukraine announced a moratorium on any payments of the Russian debt, including repayment of $3 billion, which was due in December 2015. The Justice Ministry was then ordered to hire lawyers to defend Ukraine in court. Subsequently, Ukraine's parliament declared that the moratorium had no fixed term.
According to lawyers and debt market experts polled by UNIAN news agency, the upcoming trial with Russia will be cumbersome and may take several years. Experts also say the trial, itself, does not pose a threat to Ukraine and a court ruling in Russia's favor will not be sufficient grounds for instant payment of the debt.