Ukraine pushes for debt freeze to dodge default

Ukraine has asked its creditors for a two-year payment freeze on its international bonds in a bid to focus its dwindling financial resources on repelling Russia.

Creditors have until Aug. 9 to vote on the proposal. Ukraine has called its plan a liability management exercise, indicating Kyiv's efforts to spare bondholders a writedown on the bonds. Official creditors have already said they would suspend payments owed to them and urged bondholders to accept the country's request for the freeze.

The group, including Canada, France, Germany, Japan, the United Kingdom and the United States, said they would provide a coordinated suspension of debt servicing from August 1 to the end of 2023 and potentially for an additional year.

At the end of 2020, Ukraine had $130 billion in external debt outstanding, according to World Bank data.

Ukraine has earmarked nearly $20 billion in international bonds to be subject to the debt freeze - eleven dollar-denominated securities and two euro-denominated ones - maturing 2022 to 2030. Ukraine also has a warrant linked to GDP growth in the mix for an overhaul. This was created during its 2015 debt restructuring as a sweetener to creditors.