Public debt restructuring: Ukraine continues talks with all holders of GDP warrants

The relevant statement was made by Ukrainian Finance Minister Sergii Marchenko, commenting on the cleansing statement published on the Euronext by the Government of Ukraine, an Ukrinform correspondent reports, referring to the ministry’s press service.

“The damage caused by Russia’s unprovoked and unjustified military aggression against Ukraine has been immense and unprecedented – with economic losses estimated in the hundreds of billions, and infrastructure across the entire country severely affected. According to the World Bank, reconstruction costs are expected to exceed EUR 500 billion over the next decade. For Ukraine to recover and rebuild, financial stability and sustainable public debt are essential,” Marchenko noted.

In his words, the GDP warrants were designed for a world that no longer exists. Ukraine’s modest economic growth in 2023 was not a sign of surging prosperity but a fragile rebound from a nearly 30% downturn caused by Russia’s full-scale invasion.

Between April 15, 2025 and April 23, 2025, Ukrainian representatives held a meeting with certain members of the ad hoc committee comprised of institutional holders of Ukraine’s outstanding U.S.$3,239,320,000 GDP-linked Securities (the “Warrants”).

The Ukrainian side offered two options for the treatment of GDP-linked warrants. Firstly, the exchange of warrants into additional eurobonds, which were issued as part of restructuring in 2024. With this option, investors receive the same set of A bonds and B bonds as last year’s eurobond holders in the exchange ratio of 1.35x.

Secondly, the cancellation of payment amounts for 2025-2028; extending the exercise date of the call option to May 31, 2029; and compensating the warrant holders USD 36.6 of Ukraine bonds for USD 100 notional amount of warrants.

As noted by the ministry, both options are offered as a single restructuring proposal. Investors can choose any of the two options, and choosing any of them will mean supporting the restructuring process. For the successful implementation of the debt reorganization, the consent of the holders of at least 75% of the total amount of GDP warrants is required.

Meanwhile, the ad hoc committee suggested that Ukraine pay 75% of the payment due May 2025, and issue new C bonds at a rate of 7.75% in the amount of USD 209 million, maturing in February 2029. Ukraine declined that proposal.

“Ukraine remains fully committed to constructive talks with all holders of GDP warrants to find a solution that ensures long-term debt sustainability without jeopardizing the country’s reconstruction and recovery,” Marchenko concluded.

A reminder that, according to the Financial Times, last month the International Monetary Fund (IMF) said that “if left untreated” the warrants “constitute an important risk” for the stability of an ongoing USD 15.5 billion bailout and Kyiv’s restructuring of more than USD 20 billion in bonds last year.

The warrants were left out of last year’s restructuring given their complexity, but Kyiv needs to strike a deal on them to avoid billions of dollars of payments flowing to investors in the years ahead.