Ukraine’s Eurobonds rose to the highest level in five months as the nation’s Finance Minister Natalie Jaresko prepared to join restructuring negotiations with creditors for the first time.
The country’s $2.6 billion dollar-denominated bond maturing July 2017 rose 1.25 cents to 53.75 cents on the dollar by 6:47 p.m. in Kiev. Jaresko will meet with bondholders in Washington on Wednesday, the Finance Ministry and a creditor committee led by Franklin Templeton said in a joint statement on Friday. Debt envoy Vitaly Lisovenko represented Ukraine in phone-based talks last week.
The nation’s bonds have risen on all but one day since both parties agreed on July 1 to take negotiations private as investors wagered a deal can be done before the first security comes due in September. Ukraine has threatened to stop servicing its international debt if creditors don’t agree to a writedown to the face value of their holdings.
“Bonds are probably up because of the negotiations,” Regis Chatellier, a London-based director of emerging-market credit strategy at Societe Generale SA, said by e-mail Monday. “A deal will probably happen, but the market is a bit over-optimistic regarding the restructuring conditions: I think there will be a haircut.”
The creditors submitted a plan in May, saying that the targets of the restructuring can be met by postponing the due date of the bonds and lowering interest payments. A Ukrainian counterproposal asked for a 40 percent principal writedown, a person familiar with the document said last month.
“We ask our creditors to accept our offers that have been made by the Ukrainian government and to accept a compromise,” Ukrainian Prime Minister Arseniy Yatsenyuk said at a business forum in Washington Monday.
Spokesmen for the Ukrainian Finance Ministry and the creditor committee declined to give further details on the talks when contacted by e-mail today.
Along with Franklin Templeton, the credit group includes BTG Pactual Europe LLP, TCW Investment Management Co. and T. Rowe Price Associates Inc.