Wednesday, March 22

Ukraine buys back GDP-linked debt as Russia tensions weigh on bonds

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KYIV — Ukraine has reduced its debt by buying back part of its 2022 Eurobond and some securities linked to economic growth, known as GDP warrants, the finance ministry said late on Friday, citing “favorable market conditions.”

Market prices for Ukraine’s Eurobonds have dropped amid fears of a potential Russian attack. Russia has amassed some 100,000 troops near its border with Ukraine.

Ukraine repurchased 10% of its dollar-denominated Eurobond maturing in September, cutting the bond’s outstanding volume to $912 million, the finance ministry said in a stock market announcement.

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It also said that “as a result of its liability management exercises” conducted by Feb. 4, it had doubled its holdings of GDP warrants to 20%. Ukraine bought back 10% in 2020.

Ukraine issued $3.6 billion of GDP warrants to sweeten its 2015 restructuring of $15 billion of debt, which forced investors to write off 20 percent of the original value of their holdings. They have been trading at around 76 percent of face value.

Ukraine’s debt management strategy for 2021–2024 allows it to buy back government securities in order to smooth “the state debt service profile and reduce peak pressure on the state budget,” the ministry said.

Under that strategy, it “may buy back, at any time and from time to time, additional outstanding securities of Ukraine.”

These include but are “not limited to the GDP-Linked Securities or the 2022 Notes, in open-market purchases, privately negotiated transactions or otherwise depending on prevailing market conditions,” the finance ministry said. (Reporting by Natalia Zinets; Editing by Catherine Evans)