Ukraine's Debt Drama: $20B Restructure Amidst War

Ukraine has successfully negotiated a restructuring of over $20 billion in international debt, securing approval from more than 97% of its bondholders. This restructuring will reduce the debt's face value by over a third, aiding Ukraine's financial stability amidst its ongoing war with Russia. The new bonds will begin trading on Aug. 30.

Ukraine announced on Wednesday that international bondholders had formally approved its plan to restructure over $20 billion of debt amidst its ongoing war with Russia. Kyiv reported that over 97% of its debt holders met the required deadline, allowing the restructuring to proceed.

The plan will reduce the face value of Ukraine's international bonds by more than a third, maintaining alignment with its key supporter, the International Monetary Fund, which required the writedown to achieve sustainable debt levels. While borrowing from international capital markets will only resume after significant de-escalation of the war, finalizing the restructuring marks a crucial step, according to Ukraine's Finance Minister Serhiy Marchenko.

The move ensures Ukraine maintains budget stability to continue financing its defense and is an important effort toward long-term economic sustainability. This is the second debt restructuring Ukraine has undertaken in a decade following Russian aggression, the previous one occurring in 2015 post-Crimea annexation. The accelerated process, taking just four months to negotiate, replaces a two-year bond payment moratorium granted in summer 2022.

(With inputs from agencies.)