By Karin Strohecker
May 12 (Reuters) - A group of Ukraine's biggest
creditors said on Thursday it had submitted new detailed proposals to
restructure Kiev's debt but the plan still rejects any writedown in the face
value of the bonds.
Ukraine has set itself a June deadline to get a deal
in place with creditors, with around $23 billion worth of debt earmarked for
restructuring. But progress in the talks has been slow, with little movement in
recent weeks from either the creditors or the government.
The restructuring aims to save Ukraine around $15
billion over a four-year period as private bondholders' contribution towards an
IMF-backed economic turnaround package, put in place after war and political
upheaval that have sent Ukraine's currency and economy into a tailspin.
Ukraine has stressed that the
restructuring must involve a "haircut" or writedown in the bonds'
principal and coupons.
The creditors have steadfastly opposed
haircuts, and according to a source familiar with the talks, the new detailed
plan was in line with earlier statements and did not foresee a principal
haircut.
The ad-hoc creditor committee, which
includes investment firm Franklin Templeton and represents investors holding
bonds worth about $10 billion, did not give details of the plan it had put
forward but said it was looking forward to discussing it formally with the
Ukrainian government.
"The committee has now delivered a
detailed restructuring proposal based upon IMF assumptions," the ad-hoc
committee said in an emailed statement, adding it had not seen
"substantive engagement" by Kiev or its advisers on its initial plans
delivered four weeks ago.
"This is a compromise that balances
the stated debt reduction interests of Ukraine and one of the investors'
objectives of avoiding a principal reduction."
The bondholders issued their statement
as an IMF mission was due to arrive in Kiev to review progress with conditions
of its $17.5 billion four-year loan.
Ukraine expects a second tranche of
about $2.5 billion to be disbursed under the programme after the review.
The committee said it was willing to
support a "prudent" debt restructuring, though it did not give
further details of what the compromise would entail.
The finance ministry in Kiev declined to
comment.
Analysts say that with the two sides'
positions so far apart, it is highly unlikely a deal can be reached by June.
"What Ukraine really needs is quite
a big haircut. The problem is why would creditors agree to a big haircut when
there is so much uncertainty involved?" said Gabriel Sterne, head of
global macro research at Oxford Economics.
"The incentives for brinkmanship
are quite high, so they will struggle to reach an agreement in time."
Ukraine's sovereign dollar bonds, which
are trading roughly 45-48 cents in the dollar, weakened further throughout the
day.
The November 2022 issue slipped by more
than 1 cent while the July 2017 bond traded 0.4 cent lower. (Additional
reporting by Natalia Zinets; Editing by Jeremy Gaunt/Ruth Pitchford).
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