Ukraine is facing a fresh battle on the economic front — this time over hundreds of thousands of dollars in interest payments the war-ravaged nation owes on debts to Wall Street, The Post has learned.
Volodomyr Zelensky’s cash-strapped government desires to restructure a $3 billion bond and can also be looking for approval by Aug. 9 to delay a roughly $75 million interest payment to a lending group that features Franklin Templeton, Blackrock and Aurelius Capital Management, a source with direct knowledge of the situation said.
Ukraine is losing $5 billion a month because it struggles to fend off the invasion launched in February by Russian strongman Vladimir Putin, a source near the Ukrainian government said. America is sending Zelensky $1.5 billion monthly to assist offset the economic impact, along with military weaponry, the source added.
“Taxpayers are giving billions of dollars to support Ukraine. Why is it that the need for the lenders to have upside is larger than their desire to save lots of the world from a calamity?” the source said.
Presently, Ukraine is losing $5 billion a month because it struggles to fend off the invasion.Getty Images
In 2015, Franklin Templeton owned greater than one-third of the loan and continues to be a lender, though it could be at a smaller level. Above, Jenny Johnson, president and CEO.Bloomberg via Getty Images
The lending group, meanwhile, is willing to delay the upcoming interest payment to maintain the beleaguered country out of bankruptcy. But some creditors still object to Ukraine’s request to settle the debt in the following few years, a source near the lenders said.
“We’re willing to defer the cash but that doesn’t mean they need to have the best to re-cut the deal,” the source said.
Ukraine agreed to the weird $3 billion loan, which carries no principal, when it was on the sting of bankruptcy in 2015. The terms would allow the lenders – starting in 2025 – to gather 40% of the country’s gross domestic product annually if it exceeded $125 billion and was growing at greater than 4% per yr.
The lending group is amiable to delaying the interest payment on the bonds and never put the beleaguered country out of businessGetty Images
JPMorgan in 2021 estimated the worth of the bonds could wind up being around $8 billion, but that was before Putin’s forces shelled the country and devastated trade. Ukraine’s GDP has fallen to around $100 billion, in keeping with the International Monetary Fund, after having reached $200 billion last yr, its highest ever.
Ukraine desires to repay the bonds in 2025, 2026 or 2027 – before the annual payments on the bonds that mature in 2039 potentially turn into onerous — so the financially distressed government can more easily get recent financing, sources said.
The country is working with JPMorgan and law firm White & Case to persuade enough lenders to restructure the bonds by Aug. 9, the source near the lenders said. Lenders holding 75% of the $3 billion bond need to comply with any changes, the source said.
“Opposition is constructing,” the source said. “This may occasionally not get through.”
Ukraine agreed to the weird $3 billion loan, which carries no principal, when it was on the sting of bankruptcy in 2015. Getty Images
Last month, the Ukraine Ministry said it “received explicit indications of support” for the plan from a select group of lenders, including BlackRock.
Aurelius, which has made a fortune in sovereign distressed debt and is understood for suing Puerto Rico and Argentina so it could get its bonds paid in full, was not mentioned.
Neither was Franklin. In 2015, the firm owned greater than one-third of the loan and continues to be a lender, though it could be at a smaller level, sources said.
Aurelius has made a fortune in sovereign distressed debt and is understood for suing Puerto Rico and Argentina so it could get its bonds paid in full.
Franklin and Blackrock refused requests for comment when contacted by The Post.
Aurelius didn’t return a call for comment.
Not one of the lenders have made a penny on their investment to date, sources said.
“The chance on the bonds was the downside we’re experiencing today,” the source near the federal government said.