Financial sector news

On December 9, an updated announcement was published on the launch of the restructuring process related to the exchange offer and request for consent to change the terms of government derivatives linked to GDP (GDP warrants).

The Ministry of Finance of Ukraine emphasizes that the proposed terms are the optimal solution for fulfilling Ukraine's long-term commitment to restructure GDP warrants in order to restore the country's debt sustainability. The proposal was reviewed by the International Monetary Fund and the Group of Official Creditors.

Currently, government officials have reached an agreement with the Special Committee of GDP Warrant Holders to exchange securities with a nominal value of $2.59 billion for new amortized Eurobonds maturing in 2030-2032 and paying cash compensation of up to 7%.
The new bonds provide for the repayment of 45% of the principal amount on February 1, 2030, and 2031, and the remaining 10% on February 1, 2032.
The bond rate will be 4% per annum until February 1, 2027, 5.5% per annum until August 1, 2029, and 7.25% per annum until maturity.
The new securities will include a “Loss Recovery Amount” provision, which guarantees immediate payment of the specified amount if certain conditions are met. Such conditions include, in particular, non-payment of the principal amount or interest on Eurobonds C, the imposition of a moratorium on them, or their inclusion in the restructuring process of other Eurobonds.

At the same time, in order to maintain constructive, long-term relations with the holders of Class A and B Eurobonds issued on August 30, 2024, during the restructuring of Eurobonds, Ukraine has undertaken to conduct a survey on this condition.
Subject to the necessary requirements being met, the transaction is expected to be completed in 2025, taking into account Ukraine's budgetary constraints.
Due to the changes, Ukraine has extended the early exchange offer, under which GDP warrant holders will receive the highest cash consideration, from December 12 to December 15, while other terms remain unchanged, with settlements expected on December 29.

If more than 50% of GDP warrant holders participate in the exchange, Ukraine plans to delist them.