Azernews.Az

By Bloomberg

Ukraine’s government will put forward a proposal to parliament on Tuesday requesting powers to impose a debt moratorium on international creditors as negotiations over a $23 billion debt overhaul intensify.

The eastern European nation is seeking permission to hold off on paying coupons, the first of which coming due is a May 21 payment on a $1 billion note maturing in November 2016, according to data compiled by Bloomberg. Ukraine said cutting its debt burden is a question of justice, according to an e- mailed statement on Tuesday.

“This is a logical next step to show people they are serious,” Dray Simpson, the London-based managing director of emerging markets at Cantor Fitzgerald Europe, said by e-mail on Tuesday. “Up to now there has been a lot of talk and very little action and any confrontations have been won by creditors. If Ukraine are going to reverse that trend they need to be firm.”

Ukraine’s biggest creditor is Franklin Templeton, which along with three other companies owns $8.9 billion of the nation’s debt. The moratorium wouldn’t apply to debt issued by state-run companies including State Export-Import Bank of Ukraine, AT Oschadbank and Ukrainian Railways, Interfax reported earlier.

Time is running out for the country and its bondholders to reach an agreement as a June 15 International Monetary Fund deadline for the restructuring approaches. Failure to strike a deal puts the next tranche of a $17.5 billion IMF loan at risk for Ukraine as it struggles to keep the economy afloat following a yearlong conflict with pro-Russian separatists in the nation’s east.