(MENAFN) According to a report from the Wall Street Journal, a consortium of foreign bondholders is exerting pressure on Ukraine to recommence debt repayments as early as next year, potentially burdening the country with annual interest payments totaling USD500 million. These bondholders, which include investment giants such as Blackrock and Pimco, had previously granted Ukraine a two-year debt holiday in 2022, operating under the assumption that the conflict with Russia would have concluded by now.
However, with the conflict showing no signs of abating, the bondholders have enlisted legal and financial expertise to engage in negotiations with Ukrainian officials. The goal is to strike a deal that would see Ukraine resume interest payments in exchange for a significant portion of its debt being forgiven. The group currently holds approximately one-fifth of Ukraine's USD20 billion in outstanding Eurobonds.
While this portion of debt represents only a fraction of Ukraine's total external debt of USD161.5 billion, the servicing of interest on these bonds alone would impose a significant financial burden on the country. Failure to reach a deal with the bondholders by August could result in a default by Ukraine, adversely affecting its credit rating and limiting its future borrowing capacity.
Ukrainian officials are reportedly seeking support from the United States and other Western governments in negotiations with the bondholders. However, concerns have been raised that any agreement with private lenders may prioritize their repayment over that of loans extended by governments, potentially complicating the situation further.
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