UPDATE 1-Ukraine seeking law allowing a ban on foreign debt payments "if …

(Adds quotes, context on restructuring talks)

KYIV May 19 (Reuters) – Ukraine’s government said on
Tuesday it had asked parliament to back a law that would allow
the cabinet to impose a moratorium on foreign debt payments, to
defend against “unscrupulous” creditors, if necessary.

Parliamentary deputies said on television they were due to
vote on the law later on Tuesday.

Ukraine is holding talks to restructure sovereign and
state-guaranteed debt to plug a $15 billion funding gap, but
negotiations have soured in the past week, as bondholders
repeated objections to any writedown on the principal owed and
Kyiv said that stance lacked “good faith”.

Ukraine dollar-denominated bonds fell as much as 1.5 cents
after the government put out the statement.

“Without significant participation from commercial
creditors, Ukraine will not be able to stabilise the situation
and return to economic growth in 2016,” the government said in a

“In case of attacks on Ukraine by unscrupulous creditors,
the moratorium will protect state assets and the state sector,”
it said.

The debt of state-owned Ukreximbank
UA024373312= , Oschadbank
and Ukraine railways, which is
also being restructured, would not be subject to the moratorium,
the statement said.

On Monday, the bondholder group, which represents in excess
of $10 billion of Ukrainian debt and is led by Franklin
Templeton, revealed the identity of other members of the
committee, appearing to respond to accusations they lacked
transparency in talks.

(Reporting by Alessandra Prentice; Editing by Larry King)