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BNY Mellon Assists Ukrainian Government on $15 Billion External Commercial Debt Restructuring

Transaction is one of the largest sovereign debt restructurings in the emerging markets

BNY Mellon, a global leader in investment management and investment services, has acted as the tabulation and settlement agent on the $15 billion sovereign external commercial debt exchange by the Government of Ukraine. BNY Mellon has also been appointed trustee, principal paying agent, registrar and transfer agent on all nine new sovereign eurobonds and an innovative $3 billion GDP-linked securities' issuance by Ukraine.

The transaction is one of the largest commercial debt restructurings by an emerging markets' sovereign1 and was executed in compliance with the conditions of the current financing arrangement between Ukraine and the International Monetary Fund. In particular, the foreign commercial debt exchange allowed Ukraine to immediately write off approximately $3 billion of the nominal debt stock, delay principal amortisations until 2019 and extend the average life of debt in return for issuing additional securities that, between 2020 and 2040, may pay institutional investors a proportion of Ukraine's annual real GDP growth.

"BNY Mellon used its global resources to ensure that the complex commercial arrangement reached between Ukraine and its ad-hoc creditor committee could be timely and effectively implemented," said Dean Fletcher, head of Corporate Trust EMEA at BNY Mellon. "The mechanics of the restructuring involved holding meetings with bondholders on 14 different series of notes, processing nearly 4,000 individual voting instructions by our teams in EMEA and the US as well as arranging for the settlement of all new securities into the international clearing systems. Our comprehensive and well-balanced service offering allowed us to provide a single point of contact for performing all of these roles which was crucial for the successful implementation of this important and high-profile operation."

"The formal completion of the sovereign exchange forms part of a larger restructuring of Ukrainian external debt which will enable Ukraine to continue with economic reforms and receive further tranches of funding support from the IMF and other official multilateral creditors while it copes with severe geopolitical challenges, economic recession and resulting rapid currency depreciation," said Sergei Kotov, regional executive for Eastern Europe, Global Client Management at BNY Mellon. "This solution to Ukraine's funding gap over the next four years puts the country on a significantly more sustainable growth path and financing trajectory. BNY Mellon is at the forefront of these efforts, having recently acted in a similar capacity for a number of Ukrainian quasi-sovereign and privately-owned entities on their debt re-profiling exercises."

BNY Mellon collaborated closely with Lazard Freres and White & Case LLP, Ukraine's financial and legal advisors, respectively, to ensure the successful completion of Ukraine's sovereign debt exchange.