The Government of Ukraine has approved the fundamental agreements of Ukraine with a special committee of owners of its eurobonds in the amount of about $23 billion, which provide for a write-off of 37% of the debt with the possibility of restoring 12% if a certain level of GDP is reached in 2028.

Corresponding resolution of the Cabinet of Ministers No. 865 of July 31 with the terms of the issue of new bonds was published on the government portal.

According to it, new bonds will be issued with maturity in 2029 to 2036, the interest on which will gradually increase from 1.75% in the coming years to 7.75% at the end of the circulation period.

The document also includes, in exchange for the same conditions, $700 million in Ukravtodor eurobonds issued under government guarantees.

In addition, the resolution introduces a temporary moratorium on payments on eurobonds from August 1 to implement the restructuring.

According to the document, the Ministry of Finance will pay holders of Ukrainian eurobonds a reward in the total amount of up to $246 million for the exchange, and holders of Ukrenergo eurobonds will receive up to $8.75 million.

In accordance with the previously published agreements, the consent fee was 1.25% of the amount of the bonds being exchanged.

According to the resolution, new dollar bonds will be issued in exchange for the existing bonds in two parts. Part A in four series with maturity on February 1, 2029, 2034, 2035 and 2036, respectively, Part B also in four series with maturity on February 1, 2030, 2034, 2035 and 2036, respectively.

The published document does not provide a breakdown of bonds A and B by shares, while the previously published agreements assumed that bonds A maturing in 2029 would be issued for 12.5% ​​of the total amount of bonds A, in 2034 for 32.5%, in 2035 for 30% and in 2036 for 25%.

As for the B bonds, the agreements provided for their issue with maturity in 2030 at 9.5% of the total amount of B bonds, 2034 at 35.5%, 2035 at 30% and 2036 at 25%. It is indicated that the last two series of B bonds maturing in 2035-2036 may be additionally issued on November 15, 2029, provided that Ukraine's nominal GDP in 2028 exceeds the threshold of 103% of nominal GDP projected by the IMF in accordance with the Baseline Scenario for the fourth revision of the program [UAH 11.678 trillion versus UAH 6.538 trillion in 2023] and Ukraine's real GDP in 2028 will be at least equal to real GDP according to the IMF's baseline scenario [assumes economic growth of 2.5-3.5% this year, 5.5% in 2025, 5.3% in 2026, 4.5% in 2027 and 4.3% in 2028]. At the same time, the issue of these additional bonds is limited to 12% of the existing debt amount with interest. Creditors can restore such a maximum amount of debt after write-off if the nominal GDP exceeds the projected GDP in the IMF program by 7.5%, taking into account the projected hryvnia exchange rate.

Coupon income on all bonds is paid semi-annually on August 1 and February 1.

Coupon payment rate for bonds A: 1.75% in 2024-2025, some 4.5% in 2026 the first half of 2027, 6% in the second half of 2027-2033 and 7.75% starting from 2034 and onwards.

Coupon payments on bonds B: none until the second half of 2027, then paid at a rate of 3% from the second half of 2027 until 2033 and at a rate of 7.75% from 2034 onwards.