Moody’s expects Kiev to restructure $3 bln debt to Moscow

MOSCOW, Dec 14 (PRIME) -- International rating agency Moody’s expects that Ukraine’s U.S. $3 billion debt to Russia will be restructured but negotiations are likely to be long and controversial, the agency said in a research note on Monday.

“Although we expect the Russian Eurobonds will be restructured, and probably on the same conditions as other holders of Eurobonds of Ukraine, but any such negotiations will likely be protracted and controversial,” it said.

Russia said it is ready to restructure the bond, which matures on December 20, by receiving an interest payment in 2015 and $1 billion payments annually in 2016–2018, if the debt is guaranteed by the U.S. or the E.U. or one of international financial institutes, but Ukraine’s Minister of Finance Natalie Jaresko said that the restructuring contradicts norms of the IMF.

On December 9, Russian President Vladimir Putin ordered the government to file a lawsuit against Ukraine over the debt if Kiev fails to repay it. Ukrainian Prime Minister Arseny Yatsenyuk said Ukraine is ready to litigate with Russia over the debt.

Yatsenyuk said earlier that Russia will not receive any other conditions than other creditors, although Russia is the sole sovereign lender. The basic condition is a 20% debt write-off and a postponement of all debts for four years, otherwise Ukraine will impose a moratorium on bond repayment.

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