Bondholders Negotiating With Ukraine Named

The four holders of Ukrainian debt who are negotiating with the government on a restructuring plan to avoid losses on their holdings are T. Rowe Price, TCW Group, BTG Pactual Europe and Franklin Templeton Investments, according to a statement issued by the group Monday.

The four investors hold about $8.9 billion of Ukraine's outstanding debt, the group said. They formed a committee in March to negotiate with Ukraine on a deal that wouldn't involve a reduction in the value of the bonds they hold.

The group is, however, running against the clock.

The International Monetary Fund, which agreed in March to a $17.5 billion bailout package for Ukraine to help keep the country's economy afloat, said it is vital that a deal between the government and the creditors is completed by mid-June.

The four investors have been sitting on significant paper losses after a monthslong conflict with Russia put strain on Ukraine's economy and financial system, causing a steep slide in the value of the bonds.

The creditors' group, advised by Blackstone Group International Partners LLP and Weil, Gotshal & Manges LLP, says it has so far made little progress.

Ashmore Group was part of the initial group but has since pulled out, according to a person familiar with the matter. The statement said the committee and its advisers are in regular contact with additional debtholders who aren't part of the group.

In its statement, the committee said it had provided Ukraine's finance ministry with a "detailed proposal that the committee believes meets the objectives of the ministry without any principal debt reductions and would provide the country with a solid foundation for economic recovery." It didn't provide further details of the proposal.

Ukraine, advised by Lazard Ltd. and White & Case LLP, last week voiced concerns "about the approach taken by the creditors' committee" as well as "their lack of willingness to engage in negotiations."

Despite tense negotiations that continued over the weekend, the two sides remain far apart, according to people familiar with the matter.

"The two sides are still too far apart to reach a deal by the June deadline and so a standoff is the most likely outcome, possibly involving imposition of a debt moratorium by Ukraine," said Andrew Matheny, an analyst at Goldman Sachs.

U.S. asset manager Franklin Templeton Investments, which had about $4 billion of the Ukrainian bonds at the end of December, is the largest debt holder in the group and is taking a lead role in the committee, according to a person familiar with the matter.

Write to Chiara Albanese at [e-mail]

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