Written by Rodrigo Campos
NEW YORK (Reuters) – Ukraine has suffered a setback in its quest to complete the outlines of a debt restructuring before a two-year payment freeze agreed to by private holders of about $20 billion in Eurobonds maturing expires at the end of August.
The government announced on Monday that it had not reached an agreement with a group of bondholders, raising the possibility that the war-torn country could slide into default.
Below is a timeline of events related to the debt impact of Russia's wars with Ukraine.
2014
February – Russia invades the Ukrainian peninsula of Crimea. The invasion, as well as the war in Donbas, sparked an economic crisis that made debt payments unsustainable, forcing restructuring.
Allocated for restructuring are all Eurobonds issued before February 2014 – including $3 billion worth of Eurobonds issued under English law, owed to Russia, and still subject to court proceedings.
2015
November – Ukraine completes its debt restructuring, resulting in the issuance of 13 dollar and euro bonds currently worth around $20 billion outstanding as well as a $2.7 billion GDP guarantee – all within the scope of the current restructuring.
2022
February – Russia invades Ukraine, sparking the deadliest war on European soil in more than 70 years. Ukraine's economy and finances are imploding, prompting the country to request a freeze on its debt payments to avoid defaulting on its sovereign debt entirely.
March – Ukraine begins issuing war bonds on the domestic market.
July – Naftogaz becomes the first Ukrainian state entity to default since the beginning of the Russian invasion after creditors did not support a two-year moratorium. Kiev is asking holders of $1.5 billion in bonds from state agencies Ukravtodor and Ukrenergo to defer payments — and they have agreed.
August – Ukraine's private creditors abroad support the country's request to freeze payments on nearly $20 billion in Eurobonds for two years. International rating agencies Standard & Poor's and Fitch consider the stock market “defaulting”, which led to a short-term downgrade of the credit rating to default. The country now owes nearly $24 billion on those bonds, including interest.
September – Ukraine and its bilateral partners finalize a memorandum of understanding to implement a two-year debt service suspension, which was announced two months ago and later extended.
2023
March – The Group of Creditors of Ukraine (GCU), which includes Canada, France, Germany, Japan, Britain and the United States, provides financing guarantees to support the expected loan from the International Monetary Fund. This includes extending the previously agreed payment deferral until 2027.
March – The IMF Board approves a four-year, $15.6 billion loan program for Ukraine to support the country's economy.
November – In its 2024 budget, Ukraine details a projected deficit of $44 billion.
2024
March – Reuters reported that holders of Ukrainian bonds abroad were in talks to form a creditors' committee ahead of debt recast talks. The formation of the group became official in April.
April – A sweeping foreign aid package is approved in the US Congress after months of delay, paving the way for $61 billion in funding for Ukraine.
May – Ukraine seeks to agree a restructuring with its private creditors before the end of the payment freeze period.
June – The G7 agreed to provide Ukraine with $50 billion in loans using interest earned on frozen Russian assets.
June – Ukraine says it was unable to reach an agreement during formal talks with a group of bondholders on restructuring its commercial debt, pushing the country closer to default. Finance Minister Serhiy Marchenko says the talks will continue and he expects the government to reach an agreement by August 1.
