(Bloomberg) -- Ukraine has made a payment of about $200 million to holders of its GDP warrants, securities that weren’t part of a recent $20 billion eurobond restructuring agreement with private creditors, the finance ministry said.
The payment comes after the finance ministry said in a statement in July that it intended to pay a consent fee in early August linked to $2.6 billion of outstanding warrants, as well as a deferred payment on the notes from 2021. It also said it would “commit to ensure the fair and equitable treatment of holders of the warrants in any prospective future liability management or other treatment proposal.”
The government opted to transfer the money to warrant-holders despite President Volodymyr Zelenskiy signing into law on Wednesday a bill that allows Ukraine to defer payments on foreign debt. The finance ministry said the payment included a consent fee and interest of $130.1 million, and a deferred payment and interest from 2021 growth of $70.5 million.
The warrants have disbursements linked to Ukraine’s economic performance, providing creditors with payments if gross domestic product expansion exceeds certain levels. They were issued as a sweetener during a previous debt revamp in 2015, but were excluded from a recent $20 billion bond restructuring agreement in principle between holders of Ukraine’s international bonds and the government.
“The payment of the consent fee under the terms of 2022 consent solicitation will result in securing a call option on the warrants outstanding – the ability to redeem all warrants at par value during the next three years,” Ukraine’s finance ministry said Thursday in an emailed statement. The ministry said that Ukraine is one of the largest holders of GDP warrants and would get back about 20% of the deferred $70.5 million payment.
The warrants, which mature in 2041, traded at about 61 cents on the dollar on Thursday, recovering to price levels seen before Russia’s full-scale invasion of Ukraine in early 2022.
Ahead of debt-restructuring with the government, funds including Aurelius Capital Management LP and VR Capital Group formed a creditor group advised by Cleary Gottlieb Steen & Hamilton LLP. The group holds more than 25% of the aggregate outstanding principal amount of warrants, Cleary said in a statement.
(Updates with Ukraine’s Finance Ministry comment in fourth paragraph)
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