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UK court obliges Ukraine to pay par value on its Eurobond debt to Russia

UK court obliges Ukraine to pay par value on its Eurobond debt to Russia
The High Court of London has bound Ukraine to pay £2.8 million ($3.6 million) to Russia as compensation for legal costs related to Kiev’s Eurobond debt, the Russian Finance Ministry announced on Wednesday.

According to a statement on its website, Ukraine has been ordered: “to compensate a portion of costs related to legal proceedings to Russia in the amount of £2.8 million, with 50 percent to be paid by the debtor at the latest of September 20, 2017."

In March, the court ruled Ukraine failed to offer a “justifiable” or court-ready defense for not paying back the $3 billion lent by Russia in 2013 during the presidency of Viktor Yanukovich. The financial aid from Russia to Ukraine came in the form of a Eurobond governed by English law.

The court has ruled Kiev must pay Moscow the par value of Eurobonds, the coupon payment of $75 million and penalty interest on those amounts.

It also said it would consider Russia's demand for compensation - due to Kiev’s default on its debt - in 2018, after the case’s full hearing.

After Ukraine had failed to repay the notes following a 10-day grace period after the deadline in 2015, Russia brought the lawsuit in the English courts. Moscow offered Kiev a debt-relief plan, under which it could repay its arrears in three installments of $1 billion over three years.

However, Ukraine refused to pay, claiming the money was a political credit which the country was forced to take.

Ukraine insisted on a full hearing, citing the political nature of the case.

According to Kiev, in 2013 the Ukrainian government was subject to “massive, unlawful and illegitimate economic and political pressure.”