Fears about Ukraine’s default were allayed in the Ukrainian parliament.

The WSJ reported the other day that some owners of Ukrainian Eurobonds want Ukraine to resume servicing its obligations starting next year, with up to $0.5B in interest payments annually. If the parties do not agree on the terms of restructuring, then Ukraine may declare default after the end of the debt holiday in August.

The head of the parliament’s financial committee, Danylo Hetmantsev, explained that the state is preparing for negotiations with private creditors regarding a new debt restructuring. A possible deal on bonds worth about $20B and GDP warrants includes two options:

1. extension of debt deferment
2. carrying out a full-fledged restructuring with the issuance of new, longer-term securities, which may involve writing off a certain part of the debt in exchange for delayed compensation and/or guarantees for creditors

Hetmantsev said, “that the restructuring process is complicated and involves financial and legal advisers who work under conditions of non-disclosure of information. At this stage, the probability of default where the parties do not agree on restructuring at all is minimal.”