Comment by the Minister of Finance on the statement published by the Government of Ukraine on the Euronext exchange

The Minister of Finance of Ukraine Sergii Marchenko commented on the statement published by the Government of Ukraine on the Euronext exchange:

“As a consequence of russia’s continuing war of aggression, Ukraine faces unprecedented challenges in maintaining the stability of public finances.  Ukraine’s economy contracted by nearly 30% following russia’s full-scale invasion — a shock without precedent in modern Europe from which our country is just beginning to recover. Yet the war is far from over: Ukraine continues to face daily attacks, enduring immense human losses and relentless damage to critical infrastructure.

With the support our public bondholders, we successfully restructured more than USD 20 billion of Eurobonds last summer in a manner compatible with the requirements of our IMF programme. Following the completion of this process, and consistent with the requirements of our IMF programme and our commitments to international partners, we are now seeking to restructure our GDP-warrants.

To this end, we appreciate the engagement of the GDP warrant holders’ committee during the last weeks.  However the lack of progress in narrowing the economic gap between the parties over the course of the recent discussions is regrettable.   We will therefore seek feedback from the wider set of stakeholders including market participants to identify a practical path forward that will allow Ukraine to retire an instrument which was not designed for the current extraordinary circumstances.

Ukraine has proven that, even in wartime, we remain committed to constructive dialogue and finding mutually beneficial solutions with our public and private sector partners. We have too many things to rebuild in our country — we are determined to make sure investor trust is not one of them.

Our objective remains clear — to secure a solution that supports Ukraine’s macroeconomic stability and recovery, while maintaining our commitments under the IMF program and respecting the principle of Comparability of Treatment with our international partners. Continued engagement with investors is essential as we defend our country and lay the foundations for a stronger, more resilient economy once Russia ends its war of aggression.”

On November 6, the Ministry of Finance announced that between October 16 and November 5, Ukraine held restricted discussions with members of the Ad Hoc Committee, comprised of institutional holders of Ukraine’s outstanding GDP-linked Securities (“Warrants”), to propose a restructuring of these instruments, to meet the IMF and GCU objectives and program requirements. These discussions form part of the Government’s broader effort to restore debt sustainability in line with the objectives of Ukraine’s IMF-supported program. 

During the second round of the restricted discussions, Ukraine presented a proposal to the Ad Hoc Committee describing the terms of the restructuring of the Warrants.  Ukraine’s proposal incorporates the market feedback gathered over the past months, considering the relative diversity of the underlying investor base. The proposal is structured as an exchange of Warrants into new Ukraine Eurobonds (“C Bonds”):

• Under this proposal, Warrant holders would receive new C bonds with a 1.26 exchange ratio. 

• The new C bonds would have a soft amortizing profile over 2030-31-32  and a step-up coupon profile, starting from an initial level of 2.5% and progressively increasing to 6.0% by 2030.

• The offer also includes a cash component of 6 cents (including a 1 cent consent fee) both as an incentive for the exchange offer and as a partial compensation for the payment amount under the Warrants that was due on 2 June 2025 and remains unpaid.

• This proposal includes a loss reinstatement provision to mitigate risks for Warrant holders in case of a second restructuring.

The Ad Hoc Committee’s counterproposal to Ukraine is based on a comprehensive exchange of warrants into new C bonds with substantially higher economics. However, the characteristics of the C bonds offered by the AHG are not acceptable for Ukraine, and are not compatible with IMF and GCU requirements. This includes a substantial increase in debt stock, a shorter maturity with a first substantial amortization as soon as 2029, and higher coupon levels (between 5 and 7.75%)   

Very limited engagement on economics was achieved with Warrant holders between the start and the end of the restricted discussions period.

Because of the lack of meaningful progress on economics, Ukraine indicated that it could not accept the Ad Hoc Committee’s final proposal and declined to make any further proposal to the Ad Hoc Committee before the end of the Restricted Period.

Ukraine remains committed to engaging in constructive negotiations with all Warrant holders in order to find a solution that ensures long-term debt sustainability without jeopardizing the country’s recovery and reconstruction.