Embattled Ukraine Gets Reprieve As Holders Of International Bonds Worth $19.6B Agree To Defer Payments

Ukraine has received permission from its bondholders to defer payments on its international bonds in order to preserve cash and maintain its defense against Russia, reported Markets Insider.

Bondholders Back Ukraine: Bondholders representing 75% of Ukraine’s outstanding foreign bonds worth $19.6 billion have given their nod to defer payment of interest as well as principal till 2024, the report stated. Allies including the U.S. and the International Monetary Fund have supported the move.

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Earlier on Tuesday, Ukraine got a reprieve following its creditors agreeing to renegotiate terms on $3.2 billion worth of gross-domestic-product warrants, the report said. The GDP warrants are debt payments linked to Ukraine's economic growth.

Ukraine has drained its foreign-currency reserves in the wake of its war against Russia, and the nation is now depending heavily on funding from its central bank, the report said.

Benzinga's Take: Sovereign debt is considered one of the safest forms of investment. If a nation defaults on its bond payments, it could have wider repercussions, beginning with the depreciation of its currency. A weaker currency pushes up import costs as well as the nation's borrowing costs. Ukraine's move of deferring bond payments, therefore, could be a prudent one.