Cash-strapped Ukraine said on Thursday it wanted to restructure $3 billion in International Monetary Fund debt falling due this year, jolting the debt market and surprising the Fund which says it has received no such request. Rating agency Standard and Poor's revised its outlook on the former Soviet republic's sovereign ratings to negative from stable on the same day, citing "significant fiscal and external refinancing needs".
Ukraine, which has about $9 billion in outstanding Eurobonds, faces a heavy debt repayment schedule this year while its economy, dominated by steel exports, is slowing due to weak global demand. Earlier this week, Ukrainian Prime Minister Mykola Azarov told Reuters that Ukraine, which is sending a government delegation to IMF headquarters in Washington this month, sought only to refinance the maturing debt.
But, in what the market saw as a risky negotiation tactic, First Deputy Economy Minister Vadim Kopylov said on Thursday that restructuring was the preferred option. "Talks are being held now on restructuring the debt falling due this year (which amounts to) $3 billion," Kopylov told reporters on Thursday. "We need to discuss delaying repayment of these funds by 10 years."
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