Azernews.Az

By Bloomberg

A creditor group led by Franklin Templeton urged Ukraine and the International Monetary Fund to publish the lender’s latest assumptions on the nation’s economy so it can evaluate a restructuring proposal from the government.

The IMF last month revised downward its projection for Ukraine’s 2015 gross domestic product, throwing into doubt the baseline assumptions on which a bondholder proposal for changing the terms on about $19 billion of debt were based. Ukraine, which has rejected the creditor offer, responded with its own restructuring plan on Friday that uses revised IMF estimates.

The updated numbers need to be published “in order to properly consider the proposal,” the creditor group, which owns about $9 billion of Ukraine debt, said in an e-mailed statement Monday. The plan that it submitted in May remains “the best way forward,” it said.

Negotiations have been deadlocked as the creditor committee stuck by its plan even after it was rejected by the government. The Ukrainian proposal includes a writedown of principal as well as maturity extensions and coupon reductions, Finance Minister Natalie Jaresko said Friday. The creditors insist that a cut to face value isn’t necessary to meet the three restructuring targets mandated by the IMF.

Bondholders have a few weeks to accept the Ukrainian offer before the government imposes a moratorium on debt payments, a person familiar with the talks said Friday. The offer includes a 40 percent principal writedown, said the person, who asked not to be identified because the details are private.

Meeting Date

“The proposal is based on IMF assumptions about the Ukraine economy which haven’t yet been placed in the public domain and which are not scheduled to be made public until mid- July,” the creditor committee said Monday.

Ukraine’s $2.6 billion of notes due July 2017 rose 0.83 cent to 47.21 cents on the dollar at 1:12 p.m. in Kiev. The securities traded as high as 52.60 cents on June 8, the highest since Feb. 17 on a closing basis.

The IMF on May 31 said Ukraine’s economy will shrink by 9 percent this year, revising its estimate from 5.5 percent.

A meeting between Ukraine, creditors and the IMF will take place this week in Washington, Jaresko said on Friday. No date has been set for the meeting, “despite Ukraine’s public statements to the contrary,” creditors said in their statement today.

Their proposal “offers Ukraine debt relief worth $16 billion over the next four years, would allow Ukraine ongoing access to global capital markets and meets all the criteria laid down by the IMF,” they said in the statement. “We view it as vital that all parties sit down and negotiate a deal in good faith, without preconditions, as soon as possible.”

The three IMF goals are savings of $15.3 billion over four years, reducing the ratio of debt to less than 71 percent of GDP by 2020 and bringing the budget’s gross financing needs to an average of 10 percent of GDP from 2019 to 2025.

Ukraine made a scheduled $75 million coupon payment on $3 billion of Eurobonds sold to Russia in 2013, the Russian Finance Ministry said.