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Ukraine could default in July

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Staff writer ▼ | June 26, 2015
Ukrainian Finance Minister Natalie Jaresko doesn't rule out the country failing to make a $120 million coupon payment on July 24 and default.
Natalie Jaresko
Ukraine   Finance Minister Natalie Jaresko:
Ukraine could theoretically default next month, as in May the country's parliament adopted a law allowing a moratorium on foreign debt repayments. The law aims to protect Kiev from an “attack by unscrupulous creditors.”

This echoed a forecast made by a Goldman Sachs analyst Andrew Matheny on Wednesday.

“Ukraine will not make the July 24 coupon payment and, as a result, will enter into default at that point…We do not expect the ad hoc committee to accept Ukraine's latest restructuring proposal,” he said, Bloomberg reports.

Ukraine has asked its creditors to write off 40 percent of its debt and adopt new bonds tied to its future economic performance. Matheny says this option could allow bondholders to make a profit in the case of positive dynamics of economic indicators of Ukraine.

The Creditors' Committee of Ukraine, which includes T. Rowe Price, TCW Group, BTG Pactual and Franklin Templeton, said it insists on changing the terms of the agreement with the Ukrainian government and the IMF to restructure the $15 billion, including $3 billion owed to Russia. The group owns about $9 billion of Ukrainian debt.


 

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