The Ukrainian Finance Ministry kept up pressure on creditors yesterday (29 June) before key restructuring talks, blaming a bondholder group for the deadlock in negotiations.
The bondholder group responding by saying that the ministry’s comments showed an inconsistency in Kyiv’s stance.
The two sides are at odds over the need to write down the face value of the bonds. Talks have been going on for three months, with neither side showing signs of budging.
Ukraine, which is seeking to plug a $15.3 billion funding gap, is meeting bondholders and the International Monetary Fund today in Washington to discuss what it has called its “last chance” offer.
“The Minister once again calls upon the Committee to seek a collaborative solution with the Ukrainian authorities as soon as possible,” the ministry said in a statement.
On Friday, creditors called on Finance Minister Natalia Yaresko to attend Tuesday’s meeting instead of debt envoy Vitaly Lisovenko and called for negotiations to start as soon as possible.
However, the Finance Ministry said the bondholder group, led by Franklin Templeton, had “consistently refused to enter direct negotiations with Ukraine under standard confidentiality terms”.
“Concerns about the impact of receiving confidential information on their trading activities has been used as an excuse not to meet with the Ukrainian representatives, including Minister Yaresko,” it said.
“If the Committee enters into confidentiality agreements, the Minister remains ready to meet with the Committee without preconditions.”
The creditor group rejected the finance ministry’s assessment of their attitude toward negotiations and said it was the Ukrainian side that had been resisting closer talks.
“For weeks, the government position has been that there was no way for the Minister to sign a confidentiality agreement. The committee has always been prepared to be restricted for the negotiations, but is still being blocked by the Minister’s legal team,” a spokesman for the committee said in an emailed statement.
“We find ourselves baffled by the Minister’s public stance relative to the stance taken with the ad hoc committee,” the statement said.
The key sticking point in talks has been Ukraine’s insistence on a writedown on the principal of the bonds. Creditors say Ukraine can make the necessary savings without such a “haircut.”
Ukraine’s representative, Lisovenko, said progress could be made at Tuesday’s talks.
“My personal opinion and sincere belief is that all the parties involved have enough information necessary for making a quick decision,” he told Reuters last week.