Wednesday, August 26, 2015

Ukraine Bonds Surge on Report Debt Deal Will Be Signed Thursday

Ukraine’s Eurobonds jumped the most in almost two months after a local magazine reported that a deal to restructure $19 billion of debt would be signed with creditors on Thursday.

The nation’s $2.6 billion of notes maturing in July 2017 gained 2.16 cents to 55.54 cents on the dollar at 7 p.m. in Kiev, headed for the biggest daily gain since July 2. Ukraine’s Novoye Vremya magazine reported Wednesday that a debt deal will be signed tomorrow, citing an unnamed source in Ukraine’s Finance Ministry. "There is no deal yet," Finance Ministry spokeswoman Daria Marchak said by phone from Kiev. A spokesman for the creditor committee declined to comment.

A deal would end five months of negotiations between the war-torn nation and a creditor group led by Franklin Templeton. The sides appeared to come closer to reaching an agreement this week when a person with knowledge of the negotiations said they are considering a 20 percent cut to face value, half of what Ukraine was originally demanding of bondholders.

“Some market participants had been expecting more difficult negotiations with the possibility of a halt of payments,” said Gintaras Shlizhyus, a Vienna-based strategist at Raiffeisen Bank International AG. “We seem to be facing a mild scenario where the restructuring is completed before the September maturity.”
Ukraine’s $1.25 billion of bonds maturing in April 2023 rallied 2 cents to 54.79 cents on the dollar, while the country’s shortest-maturity bond, which matures on Sept. 23, climbed 1.09 cents. Ukraine must give bondholders 21 days notice before voting on changes to the terms on the bonds.

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