Azernews.Az

By Bloomberg

Creditors of the State Savings Bank of Ukraine formed a committee to negotiate restructuring $1.3 billion of debts, the second state-owned lender to seek new terms on its Eurobonds.

The committee will discuss terms for extending the maturity on dollar-denominated bonds due 2016 and 2018, and a subordinated loan ending 2017 “in the coming weeks,” the bank, also known as Oschadbank, said in a statement on its website. Franklin Templeton Investment Management is among creditors on the committee, according to the statement.

The negotiations are part of Ukraine’s efforts to reprofile $23 billion in debt to meet conditions for an International Monetary Fund bailout to revive an economy that shrank 18 percent in the quarter amid a separatist conflict in its eastern regions. State Export-Import Bank of Ukraine, or Ukreximbank, said May 26 it reached an agreement with holders of close to 30 percent of its bonds to increase coupon sizes and extend maturities by seven years.

“We look forward to productive discussions with the ad hoc committee members and hope that their support will help the Bank to secure the approval of the reprofiling of the debt instruments on terms mutually beneficial to the bank and its creditors,” Chairman Andriy Pysznyy said in the statement.

Oschadbank’s $100 million dollar-denominated bond maturing March 2018 rose 0.6 cent to 72.06 cents by 3:43 p.m. in Kiev, extending this week’s gain to 5.7 cents.

Other committee members are Black River Asset Management LLC, Oaktree Capital Management L.P., Pioneer Investment Management Ltd., Spinnaker Capital Ltd., and VR Capital Group Ltd., according to Oschadbank.

Ukraine is seeking to make progress on debt restructuring in time for an IMF review in mid-June to qualify for the next slice of a $17.5 billion loan. Oschadbank, Ukreximbank and a third state-owned company are able to offer better terms than the sovereign because its bonds are only being used to meet one of the IMF’s three restructuring targets.

Negotiations on the sovereign bonds have faced hurdles with the government and its creditors at odds over the need for a cut to debt face value. While the Finance Minister has called a writedown a “necessity,” a creditor group put forward a proposal that includes maturity extensions of up to 10 years and reductions in interest payments of about $500 million, according to a person with knowledge of the thinking of the committee.