Ukraine launches $2.6 billion GDP warrant restructuring

The Cabinet of Ministers of Ukraine has announced the launch of an exchange offer and a request for consent to change the terms of the 2015 government derivatives known as GDP warrants. The Ministry of Finance's website reports that this was the result of the third round of closed negotiations with a special committee of warrant holders.

Previous two rounds ended without success, however, according to the Ministry of Finance, the parties managed to make significant progress in overcoming structural and economic differences during November 25-30.

Based on the progress made, Ukraine publicly announced the restructuring and extended the offer to all GDP warrant holders.

They are offered to exchange the derivatives for a combination of new Series C Eurobonds and a cash payment. For every $1,000 of warrants, investors will receive $1,340 in new bonds maturing in 2030-2032 instead of 2041 and bearing a rate that will gradually increase from 4% to 7.25%. In addition, there will be a cash payment and a consent fee, with the largest payments going to those who vote in favor of the offer by December 12.

The exchange period is open until December 17, and the restructuring is scheduled to take place on December 29.

The successful completion of the transaction requires the support of the holders of at least 75% of the warrants.

"GDP warrants, an instrument designed for a different time, have become a source of significant fiscal risk due to the extreme volatility of the wartime period. Without restructuring, Ukraine risks paying billions of dollars in post-war economic recovery, diverting vital funds from defense, reconstruction and important priority social welfare spending," the Minister explained the need for restructuring Sergiy Marchenko.

Private investors hold about $2.6 billion, and another $648 million was bought out by Ukraine or belongs to other entities controlled by Ukraine.

• In addition to the $2.6 billion GDP warrants, Ukraine still needs to finalize restructuring of Ukrenergo's sovereign-guaranteed Eurobonds for $825 million (a preliminary agreement was reached in April, but completion was postponed until early 2026) and Cargill's $0.7 billion external commercial loan.
• Main restructuring of external commercial debt in the amount of $20.5 billion (78% of commercial external debt) was completed by Ukraine in September 2024.