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12 Jun, 2015 00:36

Ukraine will ‘default’ if it misses $75mn Eurobond payment – Russia

Ukraine will ‘default’ if it misses $75mn Eurobond payment – Russia

Russia expects to receive a scheduled $75 million interest repayment on Ukraine’s $3 billion Eurobond debt by June 22, Russia’s Deputy Finance Minister Sergey Storchak said. However, he warns a failure to do so means Ukraine will default.

According to the terms of the $3 billion Ukrainian sovereign Eurobond issue, which was purchased by Russia at the end of 2013, the next coupon payment date is set for June 20, when Ukraine is supposed to pay off $75 million in interest.

“June 20 will be a Saturday, so the payment is expected to be received by Monday, June 22,” Storchak said in an interview with the Rossiya 1 channel.

“Non-payment will mean a default,” the finance ministry official added, saying such a scenario is not in Kiev’s interests and he expects the payment to be made.

READ MORE: Poroshenko signs law allowing moratorium on Ukraine’s foreign debt payment

According to Storchak, Moscow and Kiev are not currently discussing a possible restructuring of the debt, the full repayment of which, is due by the end of the year.

“There have been no talks [about the debt restructuring],” Storchak said. He added that Kiev is obviously closely following every new statement on the matter from Russia, while Moscow is tracking Kiev’s actions, discussions and dubious plans to introduce a moratorium on foreign debt repayment.

According to a source in the Kiev government, who spoke to the Ukrainian Apostrophe website, Kiev is not planning to make the June payment. The source also claimed the failure to pay Russia would not undermine Ukraine’s plans to receive more funds from the International Monetary Fund.

READ MORE: Ukraine ‘blackmails’ creditors with moratorium on debt repayment

In May, Ukrainian President Petro Poroshenko signed a bill that allows the government to set a moratorium on the repayment of certain foreign debt. The Eurobonds purchased by Russia are among those debts Ukraine claims to be “private” thus eligible for the planned freeze. Russia is planning to take Kiev to an international court should it miss the payment.

The total debt of Ukraine, according to the country’s Prime Minister Arseny Yatsenyuk, is estimated to be at around $50 billion, of which $30 billion is external debt and $17 billion is internal debt.