Published by Global Banking and Finance Review
Posted on December 19, 2025
By Karin Strohecker
LONDON, Dec 18 (Reuters) - Ukraine clinched a long-awaited deal to restructure $2.6 billion of growth-linked debt on Thursday, with creditors overwhelmingly accepting a bonds-and-cash swap offer - a key step for the country to emerge from sovereign default.
Kyiv said holders of 99% of the so-called GDP warrants had voted in favour of exchanging them for new bonds with coupons rising to 7.25%, plus some cash.
That comfortably surpassed the 75% support threshold Ukraine needed for all of the complex and costly GDP warrants to be retired and the deal to go through.
Ukraine defaulted on its sovereign debt in the wake of Russia's full-scale invasion in 2022. It reached a restructuring deal with holders of some $20 billion of its international bonds in 2024, but a deal on GDP warrants had remained elusive.
"This restructuring will allow Ukraine to save billions of dollars of potential payouts during post-war recovery," said Finance Minister Serhiy Marchenko, adding that it would make Ukraine's public finances more predictable.
"We are retiring a toxic instrument that has become a serious fiscal risk for Ukraine and could have undermined our recovery and reconstruction," Marchenko said in a statement.
WARRANT HOLDERS GET NEW BONDS
Warrant holders who have voted in support of the deal will receive some $3.5 billion of new C bonds maturing in 2032 and with interest rates that step up from 4% to 7.25%. Remaining holders will be allocated $35 million of the existing B bonds maturing in 2030 and 2034.
Ukraine will also cancel $604 million in GDP warrants the government held in its own accounts after a number of buybacks, which means the whole instrument will be retired.
Kyiv has wanted to get rid of the warrants because the unusual GDP-linked structure means they could have cost Ukraine, according to the government's own estimates, as much as $20 billion in payouts until 2041 in a post war-scenario of rapid reconstruction-led economic growth.
They were issued as part of Ukraine's 2015 debt restructuring after Russia's annexation of Crimea.
"Finalising the warrants restructuring deal is a crucial step on Ukraine’s path to ensuring long-term debt sustainability and our swifter re-entry to international markets once the security situation improves," Marchenko added.
UKRAINE STRUGGLING TO SHORE UP FINANCES
Returning to international markets seems a distant prospect for now for Ukraine, which has been struggling to shore up its finances during nearly four years of war with Russia.
The deal comes as European Union leaders meet in Brussels to decide whether to use frozen Russian assets to lend billions of euros to Ukraine to bolster its war effort.
The International Monetary Fund estimates that Ukraine will need about 135 billion euros ($159 billion) for 2026 and 2027.
The warrant restructuring will move to the settlement phase, the Finance Ministry said, and be finalised before year-end.
The agreement is also expected to see credit rating agencies lift Ukraine out of the default it fell into after Moscow's invasion left the country unable to service its debts.
The GDP warrants were bid at 102.203 cents on the dollar on Thursday, their highest level since November 2021, Tradeweb data showed.
(Reporting by Karin Strohecker and Sri Hari N S in Bengaluru; Graphic by Marc Jones; Editing by Alexander Smith)
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