Ukraine Makes Bond Interest Payment

LONDON—Ukraine made a key interest payment on its bonds, the finance ministry said Friday, following progress in debt-restructuring talks between the country and its creditors.

The conflict-torn country and a committee of four investors holding about $9 billion of its bonds have been in months of tense discussions to restructure $19 billion of the country's debt. They issued a joint statement last week saying progress had been made, an optimistic message ahead of Friday's deadline for a $120 million coupon payment on Ukraine's two-year bonds.

Also last week, Ukraine was allocated the proceeds of a bond sale by the European Union, which has pledged to lend the country a total of €1.8 billion ($1.97 billion). The International Monetary Fund agreed in March to a $17.5 billion bailout for Ukraine.

Prices of the country's two-year bonds increased slightly after Friday's payment announcement. The bonds were recently trading at around 56 cents to the dollar, compared with 55 cents Thursday. They were trading as low as 38 cents in March, and rallied last week after signs of progress in the talks.

Ukrainian officials have demanded a 40% principal reduction of the country's debt and had threatened to stop making repayments. The creditor group has said they won't accept any "haircut" to the amount they are owed. The finance ministry is being advised by Lazard, while Blackstone Group is advising the creditor group.

Christopher Whittall contributed to this article.

Write to Chiara Albanese at [e-mail]

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