Published by Global Banking & Finance Review®
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
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Ukraine's new GDP warrant swap proposal is seen as more appealing by Citi, potentially attracting many holders. This is a key step for Ukraine's debt recovery.
By Libby George
LONDON, Dec 5 (Reuters) - Ukraine's latest bid to swap its GDP warrants for new bonds is "significantly more appealing" than previous proposals and is likely to lure many of the holders, Citi said in a note on Friday.
Kyiv launched its offer on Monday to swap $2.6 billion in GDP-linked warrants for new "C" bonds for those who back the deal, a crucial step for the war-ravaged country to emerge from a debt default prompted by Russia's 2022 invasion.
A key group of creditors said on Friday that there "still remain a number of key points" to be resolved in relation to the terms of the new bonds offered by Ukraine before it could give the plan its backing.
Citi's emerging markets strategist Nikola Apostolov said in a note that the terms of the new offer were markedly better, with the "C" bonds offering a recovery value that is almost 15 points higher compared with earlier proposals.
"We see the “C” bonds package as significantly more attractive and would expect a high take-up among warrant holders," Apostolov wrote.
The warrants rallied more than 5 cents after the offer earlier this week, but slipped after the warrantholder statement on Thursday. They were flat on Friday, bidding at 100.63 on the dollar, Tradeweb data showed.
The costly and complex GDP warrants have payouts linked to GDP and were issued as part of a 2015 debt restructuring. The payments could accelerate sharply in a post-war scenario - with the IMF estimating they could hit as much as $6 billion.
The government proposed swapping the warrants for international bonds with a rising interest rate, plus up to $180 million as an up-front cash payment if the deal passes swiftly with widespread support.
Warrantholders voting to back the deal would get "C" bonds, while those who do not voluntarily exchange would receive bonds from an existing "B" series.
"The new bonds will, as we understand it, be senior to the older A and B series and have significant downside protection in the event of any default, establishing a floor to their value," Apostolov said in the note.
(Reporting by Libby George; Editing by Dhara Ranasinghe and Diane Craft)
A GDP warrant is a financial instrument linked to a country's gross domestic product (GDP) that provides payouts based on the country's economic performance.
Corporate bonds are debt securities issued by companies to raise capital, where the issuer promises to pay back the principal along with interest to bondholders.
Debt sustainability refers to a country's ability to manage its debt levels without requiring debt relief or accumulating excessive debt relative to its economic output.
Emerging markets are nations with social or business activity in the process of rapid growth and industrialization, often characterized by lower income levels and higher growth potential.
A bond swap is a financial strategy where an investor exchanges one bond for another, often to improve yield, reduce risk, or adjust the duration of their portfolio.
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