Ukraine debt restructure: Kiev has given Russia two weeks to agree to write off part of its loans to the country in line with other international creditors as relations between the two countries show no sign of improving and could soon get a whole lot worse.
In August, Ukraine and its international creditors agreed to write off 20% of Ukraine’s bond holdings, bringing the country’s $19bn sovereign debt down to $15.5bn
Ukraine’s Arseniy Yatsenyuk issued a statement this week claiming that all its bondholders had agreed to a restructuring deal at a meeting in London on Wednesday, but that a Russian representative had not shown up. He said he would give Moscow until Oct. 29 to agree to reduce the $3bn loan it extended to Ukraine in 2013, and threatened to sue Russia if it did not agree,
For its part, Moscow is insisting that the loan be repaid in full by the end of the year. Kiev argues that the loan, which was extended to former President Viktor Yanukovych in 2013 a few months before he fled the country, was a de-facto bribe for the pro-Russian ruler who was facing street protests.
Moscow refutes this. Speaking to reporters on Thursday, Putin spokesman Dmitry Peskov, said that Russia had no intention to agree to any restructuring. “It is a sovereign debt, and the inability to service this debt leads to a default. A default involves certain procedures.”
When asked whether Russia would be prepared to take legal action against Ukraine, Peskov warned that Ukraine’s potential failure to pay up in time could mean a show-down between the two countries at the end of December, possibly resulting in possible seizures.