Some holders of Ukraine’s dollar bonds are exploring ways to secure improved terms from the government, arguing that last year’s restructuring of GDP-linked warrants left them at a disadvantage compared to investors who received newly issued Class C notes, Bloomberg wrote according to people familiar with the discussions.
Ukraine’s Ministry of Finance and holders of $20 billion Eurobond debt successfully renegotiated the terms last year, and $3.2 billion in GDP warrants were also renegotiated – but now it seems the story might open a new chapter after ink became dry on both agreements.
Investors who exchanged their GDP warrants in December were granted a new class of dollar-denominated debt with enhanced legal protections. Now, holders of bonds issued under an earlier restructuring are debating whether they should seek comparable terms, the investors told Bloomberg, requesting anonymity because the talks are private.
The discussions are being coordinated by the law firm of Weil, Gotshal & Manges, which is organizing the bondholders, and the firm is considering sending a joint letter to the Finance Ministry to reopen negotiations. If talks fail, legal action remains an option, the investors added.
A spokesperson for the Finance Ministry declined to comment when contacted by Bloomberg, while Weil, Gotshal & Manges did not respond to requests for comment.
Class C became the center of talks between Ukraine and bondholders
At the center of the dispute is the treatment of Class C bonds issued as part of the December 2025 GDP warrant swap.
Under that transaction, Ukraine converted roughly $3.2 billion of outstanding GDP-linked securities into new Step-Up C notes due in 2032, following an overwhelming creditor vote. The Finance Ministry previously framed the move as a major step in stabilizing public finances.
The new C notes included structural features viewed by some investors as more creditor-friendly. Among them was a “loss reinstatement” mechanism – protection that could restore principal value in the event of a future restructuring – and voting rights that differed from those attached to existing Class A and B bonds.
For holders of older bonds, the issue is timing. Their own loss-reinstatement protection expired in January, while the newly issued C notes retained stronger safeguards in any potential future debt operation. Bondholders argue that this shifts relative risk across Ukraine’s external debt structure.
IMF program raises questions over future restructuring
The dispute comes as the International Monetary Fund (IMF) approved an $8.1 billion four-year program for Ukraine, replacing the 2023 facility and unlocking an immediate $1.5 billion disbursement.
Although the IMF did not call for an immediate new restructuring, it noted that further debt relief could become necessary under a downside scenario. The fund projected a cumulative financing gap of $146.3 billion over four years in a more adverse outlook, to be covered in part by “further debt relief from a deeper restructuring.”
Some creditors are waiting to determine whether the IMF program implicitly anticipates another debt operation before deciding on their next steps.
Bondholders are first considering coordinated engagement with the government, potentially through a formal letter seeking to reopen talks. Legal action remains a possibility if discussions do not yield results.