The Ukrainian Government takes note of the IMF Executive Board’s view that the so-called “Russian bond” is an official claim for the purposes of the Fund’s policy on arrears to official bilateral creditors.
Therefore, the Ukrainian Government expects that the IMF’s new Lending into Official Arrears policy will allow the IMF to continue financing Ukraine under the Extended Fund Facility, notwithstanding Ukraine’s position on the December 2015 Eurobonds and any suspension of payment thereunder. The Ukrainian Government has indeed negotiated in good faith all along and in line with the IMF-supported Program’s debt operation targets, without prejudice to its position on the underlying debt obligations themselves.
Regardless of their characterization, and reserving Ukraine’s position as to the obligations themselves, the December 2015 Eurobonds constitute debt obligations which Ukraine cannot pay in accordance with their initial terms without (i) violating the financing targets established under the Extended Fund Facility and (ii) breaching its contractual obligations under the “most favored creditor clause” included in the new sovereign debt securities issued in November 2015 as part of the recently completed debt operation.
The holders of the December 2015 Eurobonds decided not to participate in the debt exchange which was accepted by all of Ukraine's other bondholders. Under the terms of the new Ukrainian bonds issued on 12 November 2015 in the debt exchange, Ukraine is prohibited from paying holdout creditors in accordance with the original contractual terms. Furthermore, Ukraine may not settle with holdout creditors on terms which have a net present value higher than the net present value at issue of the sovereign bonds the holdout creditors would have received had they participated in the exchange operation.
The terms of the new Ukrainian sovereign bonds issued on 12 November 2015 also specifically provide that a payment default or other event of default under the December 2015 Eurobonds will not constitute a cross-default under the new bonds.
These terms were made clear in the Exchange Offer Memorandum delivered to all holders of eligible Ukrainian Eurobonds, including the holders of December 2015 Eurobonds, in the context of the recently completed debt exchange.
Ukraine remains committed to negotiating in good faith a consensual restructuring of the December 2015 Eurobonds which will allow it to remain in compliance with the financing targets agreed with the IMF under the Extended Fund Facility, while meeting its contractual commitments to other bondholders. Ukraine, furthermore, reserves all its rights under Ukrainian, English and international law, as well as any other applicable law or regulation in connection with the December 2015 Eurobonds.