Page 19 - bne_newspaper_February_02_2018

Eastern Europe
February 2, 2018 www.intellinews.com I Page 19
and Ukrainian finance ministries published conflicting views on the hearing.
Ukraine’s Ministry of Finance stated its side “conveyed strong legal arguments” against a need to repay the debt, which prompted the judges
“to reserve judgment until a later date”.
On the other hand, the Ukrainian side “failed to bring any new arguments against the validity of Russia’s claims,” the Russian finance ministry wrote, adding that the final ruling on the case will be made “in coming months”.
The holder of $3bn in Ukrainian Eurobonds, also known as “the Yanukovych debt”, is one of Russia's state funds and was the only holdout in Ukraine’s sovereign notes restructuring agreed in 2015.
The notes held by the Russian fund were issued in December 2013 and were due in December 2015, but remain outstanding as Ukraine's parliament introduced a moratorium on their repayment.
After a hearing in mid-January 2017, the High English Court ruled on March 29, 2017 that Ukraine has no arguments to avoid repayment of this debt. Later on, the court allowed the Ukrainian side to file an appeal.
“Most likely, we will have an ultimate decision
on this case in March-April and it won’t be in Ukraine’s favour. At the same time, we are sure Ukraine won’t pay this debt and there will be
no consequences of such non-payment. The non-payment won’t trigger any cross-default
on other Ukrainian debt. Ukraine will continue
to argue that any payment on this debt will breach its commitments under IMF’s EFF program (which assumes no principal payments under any Eurobonds by end-2018) as well as
its commitments to other Eurobonds holders who agreed to debt restructuring in 2015 (this restructuring deal contains the Most Favoured Creditor clause, assuming that the holdouts can’t get repayments with better NPV.) Finally, Ukraine’s parliament won’t accept removing the moratorium on repayment of debt to the Russian side, for political reasons,” Alexander Paraschiy of Concorde Capital said in a note.
“That said, we expect Ukraine (if loses the case) will postpone the repayment of the debt up until it gets a ruling from international courts on Russia’s compensation of damages to Ukraine from its aggression in Crimea and Donbas.”
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