Ukraine has officially declined to make payments to holders of government debt-linked securities by the scheduled deadline

Ukraine has officially confirmed that it failed to make the scheduled payment to holders of state derivative instruments (GDP warrants) due on June 2.

The statement was published by the Ministry of Finance of Ukraine on the Irish Stock Exchange.

The payment due on these sovereign derivatives amounts to $665.45 million.

“At the same time, Ukraine reminded the holders of state derivatives that, according to a government decision dated August 27, 2024, a moratorium on payments on these instruments is in effect and will remain in place until the restructuring process is completed,” the Finance Ministry noted.

Warrants are securities tied to economic growth, introduced by Ukraine’s Finance Ministry in 2015 under then-Minister Natalie Jaresko. In effect, they function as a kind of “tax on growth,” requiring the country to make payments to creditors when its economy grows beyond certain thresholds.

Earlier, Ukraine announced it would miss the $665 million payment on the GDP-linked debt after failing to reach a restructuring agreement with a group of creditors led by hedge funds.

The missed payment effectively constitutes a default on these bonds.

It was also reported that while the IMF will lend Ukraine $500 million, the country will have to repay the fund significantly more this summer under existing debt obligations.