Russia takes Ukraine to court over $3bn Eurobond

By bne IntelliNews February 17, 2016

Russia's Finance Ministry has filed a lawsuit against Ukraine in the High Court in London over the repayment of a $3bn Eurobond due in December 2015, plus associated costs, RIA Novosti quoted minister Anton Siluanov as saying on February 17.

The move shows that Moscow will now close all room for talks over the debt and ratchet up its argument internationally that Kyiv failed to negotiate "in good faith" with its creditors, as it must do under its ongoing bail-out programme with the International Monetary Fund (IMF) - a point that Siluanov also noted again.

The minister stressed that Kyiv had proved itself unfit to hold constructive dialogue on debt restructuring, while reiterating that the Eurobond issue should be recognised as official sovereign debt and settled on terms better than those Ukraine proposed to its private creditors.

Germany had also previously asked Ukraine to revise the terms of its offer to restructure the $3bn Eurobond, bought by Russia in 2013 from the Ukrainian government that was toppled by protests in 2014, Bloomberg reported earlier, quoting an unnamed source close to the talks.

In December, the IMF's executive board announced it will change its lending policies to allow it to keep supporting countries that fail to repay official debts. This provided an opportunity to continue supporting Ukraine if the country failed to repay the Eurobond to Russia.

Previously, IMF policy did not allow it to lend to countries that are in arrears to other governments.

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