By Marc Jones
(Reuters) -Talks between Ukraine and holders of its GDP warrants have broken down for a second time in six months, the Ukrainian government said, adding another delay to its hopes of restructuring the $3.2 billion of bond-like instruments.
Having failed with an original proposal back in April, this time Kyiv offered warrant holders a simpler plan to convert their warrants into a new traditional-style bond, sweetened with an additional cash payment.
“The parties have jointly decided to terminate the restricted discussions without reaching final agreement on the terms of a potential restructuring of the warrants,” the finance ministry said in a statement issued on Thursday.
The government intends to “continue engagement” with the debtholders, it said, adding that it would consider “all available options” to restructure the instruments, which is a stipulation of its IMF programme.
In a statement on Friday, the group of warrant holders which was negotiating with the government said its main request in the talks was for a “claim reinstatement mechanism” – effectively an insurance policy that would protect the proposed new bonds against any future debt restructuring.
Ukraine threw in the GDP warrants – fixed income securities which only pay out if Ukraine’s economy grows strongly – to help clinch its 2015 debt restructuring following Russia’s annexation of Crimea.
But their complex structure meant they were not part of last year’s broader $20 billion restructuring that became necessary following Moscow’s full-scale invasion in early 2022.
With still no sign of the war ending and the country now hoping to secure a four-year multi-billion-dollar extension of its IMF plan by the start of next year, onlookers have asked whether the Fund might recommend a further debt write-down.
The warrants themselves meanwhile climbed by just over 3 cents on Friday to 87.71 cents on the dollar – well above the 41-68 cents levels of the already restructured sovereign bonds.
Ukrainian Finance Minister Serhii Marchenko on Thursday called the lack of progress “regrettable”.
“Our objective remains clear,” he added. “To secure a solution that supports Ukraine’s macroeconomic stability and recovery, while maintaining our commitments under the IMF programme.”
(Reporting by Marc Jones; editing by Cynthia Osterman and Gareth Jones)
