Debt holders consider Ukraine restructuring deal “unfair”

“Our clients consider this approach unfair, because it would defer the average maturity by more than eight years for the existing bonds due 2015 and only half a year for the existing bonds due 2023,” Reuters quotes US law firm Shearman Sterling that represents a group holding bonds issued under UK law.

“It has been suggested that all bondholders should get identical packages of the new bonds,” the statement also said.

At the end of August, Ukraine reached a restructuring deal with Western creditors to reduce the national debt burden by about $3.6 billion. Kiev agreed with a creditor committee led by Franklin Templeton (which owns about $7 billion of Ukrainian bonds) on a 20 percent write-down of some $18 billion worth of Eurobonds.

US-born Ukrainian Finance Minister Natalie Jaresko said she hoped it was “highly unlikely” that other creditors would block the deal and said it should be finalized by the end of October. The agreement was praised by the IMF and asked the lenders to back it.

The restructuring deal was coolly received by Russia, one of Ukraine’s leading creditors. Kiev would like Moscow to accept a haircut on the $3 billion due in December. Moscow wants to the payment in full and it has already planned to invest the money in other projects.

President Poroshenko of Ukraine says Moscow should not be in a more privileged position than other lenders.

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