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
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
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
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.