Kiev stops debt payments, faces technical default

Ukrainian Prime Minister Arseny Yatsenyuk, left, and President Petro Poroshenko at an expanded meeting of the government. © Stringer
Ukraine says it will halt paying off its external debt on Wednesday, facing the risk of a technical default. The list of non-payments doesn’t include the $3 billion owed to Russia. The debt to Moscow is due in December which Russia has insisted it wants in full.

According to a document published on the website of the Ukrainian government, the restructuring applies to the $3 billion Eurobonds purchased by Russia. However, payments on them have not been suspended.

The list included seven issues of Ukrainian government bonds.

"We are talking about restructuring $15 billion, agreed by 13 of 14 Ukrainian creditors. Russia didn’t accept the haircut and, therefore, its $3 billion is not included,” said an expert polled by Russian business daily Kommersant.

READ MORE: Some of Kiev’s Western creditors refuse haircut

Kiev has stressed that Moscow will not get more favorable terms than other creditors.

The Kremlin recently responded: “The so-called debt operation, which Russia takes no part in, cannot ease Ukraine’s debt burden. It is in the debtor’s best interests to pay back the Russian Federation immediately, as a default on these liabilities will turn out much more expensive for Ukraine, which will have to pay both litigation costs and penalty interest for overdue payments.”

Ukraine is obliged to restructure its multibillion dollar debt in order to receive a $17.5 billion loan from the IMF. The lack of an agreement with Russia, one of Ukraine’s biggest creditors, thwarts the deal.