Kiev says it struck preliminary deal to restructure $20 bln debt

KIEV

Kiev has said it had struck a preliminary deal with international creditors to restructure government debt worth more than $20 billion, giving the war-torn country some financial breathing room.

Ukraine's economy has been decimated by Russia's invasion and the government is reliant on international aid to help it fund both its military and day-to-day government spending.

The government was up against the clock as a deal to freeze repayments on a series of international bonds, agreed after Moscow invaded the country in February 2022, were set to end on August 1.

In a filing with the London Stock Exchange, the Ukrainian government said it had "reached agreement in principle" on a debt restructuring.

The deal will see creditors, a group that includes BlackRock, Pimco and other major institutional investors, write billions off the nominal value of their holdings, and agree to a new payment schedule on terms more beneficial to Kiev.

"We are on the path to restoring debt sustainability," Prime Minister Denys Shmygal said in a post on X.

"This allows us to free up resources for our defence, social spending and reconstruction," he added.

Ukraine says it will save the country $11.4 billion in debt servicing over the next three years.

The group of bondholders that were negotiating the restructuring said it was "pleased to have reached a swift and constructive agreement."

"As long-term investors in Ukraine, we are pleased to be able to provide significant debt relief to Ukraine," it said.

The group had rejected an offer put forward by Ukraine last month that called for even steeper write-downs.