Ukraine says it won’t repay $3-B debt to Russian Federation

“By announcing a moratorium on returning this sovereign debt, the Ukrainian side has, you could say, in fact admitted default”, said Kremlin press secretary Dmitry Peskov.

“Russia has refused, despite our repeated attempts to sign the agreement for restructuring, to accept our proposals”, Yatsenyuk said during the Friday speech.

European Union ambassadors have agreed to extend their bloc’s economic sanctions against Russian Federation for another six months, diplomats said Friday on condition of anonymity, following halting progress on a ceasefire in eastern Ukraine. Moscow said it would file a lawsuit against Kyiv to the worldwide court if the payments were not met.

The payment is halted “until we make restructuring proposals or a relevant court decision is made”, added the Prime Minister.

“We never said there were not people there who carried out certain tasks, including in the military sphere“, he said, the Guardian reports, when asked by a Ukrainian reporter about two Russian military officers captured by Kyiv and now on trial in Ukraine.

The fact that Ukraine failed to pay back $3 billion plus $75 million of loan interest should be officially recognized upon expiry of a 10-day grace period after the payment deadline.

Ukraine’s finance ministry sounded a more conciliatory note than Yatseniuk, saying in a statement: “Ukraine remains committed…to negotiating in good faith a consensual restructuring of the December 2015 Eurobonds”.

The moratorium does not affect Ukraine’s obligation to repay the debt.

Putin also said it was impossible to say whether the Russian officers, Yevgeny Yerofeyev and Alexander Alexandrov, would be exchanged for Ukrainian helicopter pilot Nadezhda Savchenko, filmmaker Oleg Sentsov, or other Ukrainians imprisoned or facing trial in Russia. While investors had expected the default, the yield on new dollar bonds maturing in 2025 climbed three basis points Friday amid concern that political infighting could scupper changes to tax policy needed to pass next year’s budget and unlock the next tranche of an International Monetary Fund rescue loan.

The default “is just confirmation of the unimproved relations between the countries”, said Simon Quijano-Evans, the London-based chief emerging-market strategist at Commerzbank.

But many of Kyiv’s government troops which are battling the insurgents also speak Russian, belying Moscow’s claim.

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