Ukraine Creditor Planned Talks Said Not to Happen This Week

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Ukraine and a group of creditors led by Franklin Templeton won’t hold direct negotiations this week as planned, according to a person with knowledge of the situation, underscoring the difficulties in progressing the talks.

Advisers for the two parties wanted to have further technical discussions before principals meet again, said the person, who asked not to be identified because talks are private. Direct talks are planned, but a date is yet to be set, said the person.

The Ukrainian Finance Ministry agreed on July 1 to hold direct negotiations with the four-member creditor group, ending a two-month standoff over the need for a writedown to the face value of about $19 billion of Eurobonds being restructured. The International Monetary Fund has said that it will pay the next tranche of its $15.2 billion loan to the nation if conditions are met including adequate progress in the debt negotiations.

“Nobody should expect the talks to be easy,” Andreas Schwabe, an economist at Raiffeisen Bank International AG in Vienna, said by phone Thursday. “If there’s no real progress in the debt negotiations that is clearly negative.”

Lazard Ltd., which is representing Ukraine, and Blackstone Group LP on behalf of the creditor committee, are in intensified communication, the person said, without elaborating.

A spokesman for the bondholder group said he was unable to immediately comment when contacted by e-mail.

The nation’s $2.6 billion of notes due July 2017 fell 0.1 cent to 54.94 cents on the dollar at 6:22 p.m. in Kiev, trimming this month’s gain to 6.43 cents.

Ukraine plans to pay the coupon on its July 2017 bond tomorrow, according to a person familiar with the situation, who asked not to be identified because the information is private.

The IMF may disburse the next part of its aid to Ukraine after a July 31 board meeting, spokesman Gerry Rice said today in Washington.

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