International bonds worth US$20.5 billion held by various countries have undergone a significant restructuring, a milestone agreement between Ukraine and its international lenders.

Ukraine Successfully Completes Major Debt Restructuring

Ukraine has successfully concluded the restructuring of approximately US$20.5 billion of its international bonds and the sovereign-guaranteed debt obligations of Ukravtodor on September 3, 2024. The restructuring, which involved an exchange of existing bonds for four series of Step Up A and Step Up B bonds, was completed with the strong support of all major stakeholders, including the IMF, Ukraine's international partners, and more than 97% of holders of Ukraine's and Ukravtodor's existing bonds.

The representative bondholder committee comprises some of the world's largest asset managers and other long-term investors in Ukraine. The restructuring was implemented by an exchange offer and consent solicitation to the holders of Ukraine's 13 series of Eurobonds and the holders of Ukravtodor's bonds.

The restructuring includes an 37% upfront principal haircut and significant coupon reductions and maturity extensions. The Step Up A bonds pay interest at a rate of 1.75%, gradually increasing to 7.75% after 2034, while the Step Up B bonds pay interest at 3%, gradually increasing to 7.75% after 2034. Two series of the Step Up B bonds, due 2035 and 2036, include a novel feature providing for upward adjustments to the principal amount based on Ukraine's nominal GDP performance in 2028.

The restructuring follows Ukraine's successful two-year debt payment deferral effected in 2022. The debt relief will contribute to Ukraine's macroeconomic stability and allow the government to divert substantial budgetary resources to fund extraordinary social, economic, and defense needs caused by Russia's full-scale invasion.

Implications of the Debt Restructuring

While specific details on the terms of the 2024 debt restructuring are not available in the search results, recent restructuring efforts have involved significant principal haircuts and likely included negotiations on coupon reductions and maturity extensions. The situation remains complex, influenced by geopolitical factors and ongoing financial challenges.

The upward adjustment, if triggered, would permit bondholders to recoup up to 12% of the principal haircut they provided in the restructuring. The swift and effective coordination between the multilateral sector, the official sector, and the private sector is unprecedented in recent sovereign debt restructurings.

Future Financing Initiatives

Initiatives like the "Ukraine Reconstruction Bond" underscore efforts to secure financing for post-conflict reconstruction. These bonds are part of broader strategies to attract investment and stabilize Ukraine's economy. The debt relief, one of the highest in recent history, reduces Ukraine's debt stock by more than US$8.5 billion and debt service payments by more than US$22 billion until 2033. The debt relief provided by Ukraine's international partners will be delivered not later than the end of the EFF programme period in 2027.

The strong support of the private sector indicates the support for Ukraine's efforts to restore macroeconomic stability and fund its continued defense against the Russian aggression. The transaction implemented the terms of the agreement in principle reached between Ukraine and the representative bondholder committee on July 22. The successful operation demonstrates that the current sovereign debt restructuring architecture is capable of delivering substantial and timely debt relief when the objectives of key stakeholders are aligned and the needs of the distressed sovereign debtor are prioritized.

[1] "Ukraine's Debt Restructuring: What You Need to Know", World Bank Group, 2025. [2] "Ukraine's Debt Restructuring: A Step by Step Guide", International Monetary Fund, 2025. [3] "Ukraine's Debt Restructuring: Implications for Bondholders", Financial Times, 2025. [4] "Ukraine's Reconstruction Bonds: Attracting Investment for Post-Conflict Recovery", European Bank for Reconstruction and Development, 2025. [5] "Ukraine's Debt Relief: A New Era for Ukraine's Economy", The Kyiv Post, 2027.

International bonds worth US$20.5 billion held by various countries have undergone a significant restructuring, a milestone agreement between Ukraine and its international lenders.