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M. Continuo

Russia lone holdout from Ukraine debt deal


    KIEV (Reuters) - Ukraine's debt swap proposal, critical to its bailout plan, has been accepted by the majority of creditors except Russia, which did not participate in voting, Prime Minister Arseny Yatseniuk said on Thursday.

    Ukraine agreed the debt exchange with a group of its largest creditors in order to plug a $15 billion funding gap under an International Monetary Fund-led $40 billion bailout programme, but remaining creditors still need to approve the plan.

    "More than 75 percent of creditors on each bond voted for the restructuring," he said. "As expected the only country that didn't take part in the voting was the Russian Federation."

    A $3 billion Eurobond held entirely by Russia is included in the sovereign and sovereign-guaranteed bonds to be restructured, but the Kremlin has repeatedly said it will not participate in the process, arguing the debt was an official loan.

    "If they think they're unique, we're prepared to go to court ... If they're normal, then we propose on 0ct. 29 they accept the same conditions that the other creditors accepted," Yatseniuk said.

    "Russia will not get different (debt) terms ... We are willing to go to legal war with Russia," he said.

    The IMF has not yet decided whether it views Russia's bond, which matures on Dec. 20, as official sector debt.

    Finance Minister Natalia Yaresko, who spearheaded Ukraine's months-long negotiations with bondholders, said new bonds will be issued in the middle of November to creditors participating in the swap.

    (Reporting by Natalia Zinets; Writing by Alessandra Prentice; Editing by Janet Lawrence)