Ukraine to pay $40.75 mln in VRIs for first time on May 31
KYIV. May 18 (Interfax-Ukraine) – On May 31, Ukraine will make the first payment on Value Recorery Instruments (VRI) issued as part of the restructuring of Ukraine's public debt in 2015, which will amount to $40.7 million, according to a message posted on the Irish Stock Exchange.
According to it, the corresponding calculations were made on April 30 in accordance with the terms of the issue, the payment is carried out at the end of 2019.
Taking into account the total notional or nominal volume for which the VRIs were issued - $3.2 billion, the payment will be $12.58 for every $1000 of the nominal value of these instruments.
VRIs were issued as part of the restructuring of Ukraine's public debt in 2015 to replace Eurobonds for a nominal amount of about $3.2 billion (20% of the restructuring volume) and are not part of the country's public debt. Payments under VRI will be made annually in cash in U.S. dollars, depending on the dynamics of real GDP growth in Ukraine in 2019-2038, but in two calendar years - that is, between 2021 and 2040.
If GDP growth for the year is below 3% or real GDP is less than $125.4 billion, then there will be no payments on securities. If the growth of real GDP is from 3% to 4%, the payment on securities will be 15% of the excess of the GDP indicator over 3%, and if it is above 4%, then another 40% of the excess of the GDP indicator over 4%. In addition, from 2021 to 2025, payments are capped at 1% of GDP. The absence of any restrictions on payments after 2025 in the case of rapid GDP growth has been criticized by individual politicians and experts within the country.
In mid-August 2020, Ukraine announced the completion of the buyout on the open market of about 11% of its VRI to reduce payments on them in the future. Tentative payments on VRI in 2021 before their partial redemption were also estimated at $40 million, funds for them are provided in the state budget.
According to Morgan Stanley estimates, in April this year, the fair value of VRI is about 145%.
On the morning of May 18, VRIs were quoted at the rate of 108.545% of the nominal, their price increased by 1.18% over the past day.