Ukraine investors ask credit committee if debt freeze is a restructuring event

LONDON (Reuters) -Investors have asked the Credit Derivatives Determinations Committee (CDDC) if a “restructuring credit event” occurred in a two-year debt freeze of $20 billion of Ukraine’s overseas bonds, according to a statement issued by the CDDC on Monday.

The decision on whether a default insurance known as credit default swaps (CDS) should kick in is pending and the committee hasn’t scheduled any meeting after the question was submitted, the CDDC added.

Creditors are sitting on about $221 million of insurance on Ukraine’s debt, according to Depository Trust & Clearing Corporation (DTCC) data on the CDS.

The country’s international creditors last week backed Kyiv’s request for a two-year freeze on all its eurobonds, a move that will save the war-ravaged country almost $6 billion on payments until 2024.

The two-year moratorium on external debt payments would allow Ukraine to avoid a contractual or legal default as holders of around 75% of the outstanding debt agreed to change some terms of the bonds’ contracts.

However, global rating agencies S&P and Fitch lowered Ukraine’s foreign currency ratings to selective default and restricted default as they consider the country’s debt restructuring as distressed.

Battered by Russia’s invasion, which started on Feb. 24, Ukraine faces a 35%-45% economic contraction in 2022 and a monthly fiscal shortfall of $5 billion.

(Reporting by Jorgelina do Rosario; Editing by Toby Chopra and David Holmes)