Ukraine reaches agreement with private creditors

Ukraine´s private creditors accepted taking a hit on the value of their investments, removing a potential obstacle to an international bailout programme for the war-ravaged country.

Holders of the country´s sovereign debt, including US mutual fund Frankling Templeton, agreed to writedown the face value of their bonds by 20% and extend the maturities on the same by four years.

Furthermore, should the country´s economic growth rate dip below 3% then Kiev would not have to pay any interest. If the country grew more quickly than that then it would be obliged to pay a coupon rate of 7.75%, a tad more than at present.

Under the terms of its bailout package, Kiev needed to obtain $15bn of debt relief from its creditors.

In an immediate reaction the price of Ukraine´s two-year bonds jumped from 56 to 66 cents on the dollar, according to prices from Tradeweb.

Despite the agreement reached, the country´s financial situation continued to be severe as the terms were less favourable than had been expected by the likes of the International Monetary Fund.