Ukraine Reaches Deal With GDP Warrant Holders on Final Terms of $3.2B Swap

Ukraine has reached an agreement with a group of major investors on the final terms of its plan to exchange up to $3.2 billion in GDP-linked warrants for a new class of bonds, the Finance Ministry said on Tuesday. 

The agreement follows months of tense negotiations, during which warrant holders pushed for stronger legal protections and urged others to delay action until all issues were resolved.

This deal represents the final portion of sovereign debt Ukraine needed to negotiate with creditors, following the successful restructuring of $20 billion in Eurobonds last year.

Ukraine has released an updated launch announcement for the restructuring, the Finance Ministry said on Tuesday. The revised documentation, published on Euronext Dublin, reflects the outcome of extensive consultations with investors after the initial process was launched on Dec. 1.

The revised documentation, released on Euronext Dublin, reflects the outcome of extensive consultations with investors after the initial process was launched on Dec. 1, the Finance Ministry wrote.

The ad hoc group, which includes hedge funds Aurelius Capital Management LP and VR Capital Group, confirmed in a separate statement that it now supports the amended proposal, Bloomberg reported. 

Commercial terms unchanged from Dec. 1 proposal

According to the Finance Ministry, the commercial structure remains exactly as presented in Ukraine’s Dec. 1 invitation.

Under those terms, holders who participate in the voluntary exchange receive, for each $1,000 in notional value of GDP warrants:

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• $1,340 in new C-series Eurobonds, due in 2030, 2031 and 2032.
• $10 in cash, plus another $10 if the Extraordinary Resolution is approved.

Additional incentives remain part of the structure, including:

• $25 conditional participation payment, and
• $50 early consent fee for holders who submitted instructions before the early deadline.

If 75% of eligible notional votes in favor of the Extraordinary Resolution, a Mandatory Exchange applies to all remaining holders, who will receive $1,360 in Further B Notes split across maturities.

Loss reinstatement: legal drafting and protections finalized

While the financial terms remain unchanged, both sides resolved the legal drafting issues that had been delaying an agreement.

Clarifications relate to the legal protections afforded to C-bond holders, including how the securities would be treated in any future restructuring and the voting rights attached to the new notes.

The loss reinstatement – proposed earlier by GDP-warrant holders but not previously included in the final proposal – will now be incorporated, according to the offer published on Euronext.

Loss reinstatement, which determines whether new C-bond holders would receive additional protection if Ukraine undertakes another restructuring, had been one of the market’s most sensitive points, particularly as existing Eurobond holders face the expiry of their own reinstatement clause in January 2026.

Following the announcement, Ukraine’s GDP warrants due in 2041 rose more than 1 cent on the dollar, trading above 101 cents, erasing earlier losses in the session, Bloomberg reported. 

The agreement clears the way to complete the exchange, which aims to eliminate long-term fiscal risks associated with GDP warrants and strengthen Ukraine’s debt sustainability as the war with Russia enters its fourth year.

Ukraine previously renegotiated the largest portion of its external debt – $20 billion in Eurobonds. Thanks to that deal, Ukraine expects to save $11.4 billion over 2024-2027 by a through a combination of lower coupons and maturity extensions.