Ukraine Defaults on National Debt Payment; But They Won't CALL IT A "Default"

Ukraine will not pay $665 million dollars on public debt related to economic growth. The moratorium will be in effect until the completion of debt restructuring.

Ukraine has announced that it is skipping a $665 million payment on government debt linked to economic growth after the country failed to agree on restructuring terms with a group of creditors led by hedge funds, UNN reports, citing Bloomberg.

Details

Ukraine, whose economy and finances have been hit by Russia's Special Military Operation (SMO)  for more than three years, agreed with investors last year to remove the cross-default clause between so-called GDP warrants and its regular international bonds. This protects it from a scenario in which a default on one instrument is transferred to another debt.

The warrants, 20% of which are now owned by Ukraine itself, reward investors when real economic growth exceeds 3% per year, and the payment due on June 2 is linked to economic growth in 2023. But Ukraine said on Friday that a moratorium on bond payments, introduced last year, would remain in place until the restructuring of this debt is completed.

What does the Ministry of Finance say?

Today, the Ministry of Finance of Ukraine issued a statement on the Irish Stock Exchange, confirming that, according to calculations as of April 30, 2025, the amount of payment under government derivatives due on June 2, 2025, is USD 665,453,507.60.

At the same time, Ukraine reminded the holders of Government Derivatives that, in accordance with the Government's decision of August 27, 2024, there is a moratorium on payments under these instruments, which will remain in force until the completion of the process of their restructuring.

In August 2024, the cross-default provision was removed from the terms of government derivatives. This means that compliance with the moratorium on payments under government derivatives does not lead to a cross-default on obligations under external government loan bonds and does not pose a threat to the financial stability of the state.

According to the agency, the moratorium on payments under government derivatives is part of Ukraine's broader strategy, announced in August 2024 during the restructuring of public debt. This strategy envisages fair and equal treatment of all creditor claims within the perimeter of the restructuring, with the aim of restoring debt sustainability within the IMF Program.