You're reading: Yatsenyuk: Ukraine ready to settle $3 billion in eurobonds purchased by Russia

Ukraine is ready to settle the $3 billion in eurobonds that Russia purchased, Ukrainian Prime Minister Arseniy Yatsenyuk said on the air of TV program Shuster Live.

“[We’ll] have to pay. What can we do?” he said.

Yatsenyuk added that Ukraine would pay on all of its debt obligations.

“All debt – it wasn’t us who took [this debt] out – but we are going to pay no matter how difficult,” he said.

The eurobonds were part of a $15-billion aid package for Ukraine that Russian President Vladimir Putin agreed on with Viktor Yanukovych at the end of last year, just before the change of power in Ukraine. The 5 percent bonds were issued in December and traded on the Irish Stock Exchange. Russia bought them with National Welfare Fund money. VTB Capital plc arranged the offering.

Russian Finance Minister Anton Siluanov later said that Ukraine might be violating one of the covenants that debt/GDP cannot exceed 60 percent. There’s no data for this quarter but, given the devaluation, the feeling is that the ratio might be exceeded, Siluanov said.

The International Monetary Fund (IMF) forecast in its revised stand-by arrangement for Ukraine that the country’s gross state debt would grow from 40.9 percent of GDP to 67.6 percent of GDP this year due to the devaluation of the national currency and the need for the government to provide additional support for oil and gas company Naftogaz and banks. The IMF also said this would peak at 73.4 percent of GDP in 2015.