IMF to visit Kyiv for budget and loan review; Qatar ‘last bidder for Russia’s German Rosneft assets’

Qatar is the last remaining bidder for the seized German operations of Russia’s state-controlled oil company Rosneft, according to people familiar with the matter.

A Qatari delegation visited Berlin’s chancellery for talks on the purchase in recent weeks, said the people, who asked not to be identified as the discussions were private. The German government would agree to the purchase, which meant it was up to Rosneft and the buyer to seal the deal, they said.

IMF team to visit Ukraine for budget and loan review

The International Monetary Fund (IMF) will meet with Ukrainian officials next week to review the war-torn country’s budget outlook and decide whether to disburse the next $1.1-billion from a $15.6-billion aid programme.

The IMF team will visit for about a week starting on 4 September, according to people familiar with the plans who asked not to be identified before they’re announced publicly. For the last review in May, the IMF held meetings in Kyiv with Ukrainian authorities and other stakeholders, and in Warsaw, Poland.

Before the trip, IMF staff working on Ukraine will participate in an informal meeting on Thursday with the fund’s executive board to update them on the latest on Ukraine’s loan, according to one of the people.

The Washington-based fund approved the loan programme in March 2023, agreeing to lend to a country at war for the first time in its nearly 80-year history. It approved a disbursement of $2.2-billion at the end of June.

A top concern for Kyiv ahead of the visit is finalising a deal among Group of Seven nations that would unlock $50-billion in aid by harnessing the profits of frozen Russian central bank assets. Clarity on those funds will be needed for Ukraine to show its budget requirements will be met, a key component for continued IMF support.

Read more: Ukraine jittery over funding delays from frozen Russian assets

Those funds are intended to flow to Ukraine by the end of the year, according to a G7 agreement in June. However, the plan has been snarled by demands made by the US and the risk of Hungary slowing down any EU-wide decision on support for Kyiv or sanctions against Russia.

Any financing would provide badly needed support for Ukraine as the war stretches beyond the 2½-year mark. In addition to new funds, the country on Wednesday received widespread bondholder support to restructure $20-billion in overseas private debt, securing much-needed debt relief.

Ukrainian forces are struggling to halt a grinding Russian advance in the east while moving resources to a new front in Russia’s western Kursk region after its surprise incursion this month.

Read more: Zelensky will pitch plan to force Russia to end war to US

Ukraine received widespread support from private creditors to restructure its overseas bonds, allowing the nation to secure much-needed debt relief to finance its fight against Russian aggression.

The agreement, more than two years after Russia’s invasion, marks a swift resolution of the debt revamp following two rounds of negotiations in June and July, in which Kyiv asked bondholders to accept bigger losses than they initially aimed for.

Investors holding more than 97% of the country’s more than $20-billion in international bonds will swap their securities for new notes, according to a filing on the London Stock Exchange on Wednesday. The acceptance rate activated collective action clauses bringing all of the country’s foreign bonds into the restructuring.

“Finalising the eurobond debt restructuring deal is a crucial step to ensure Ukraine maintains the budget stability needed to continue financing our defence, along with other critical budget items such as healthcare, education, and social services,” Ukrainian Finance Minister Serhiy Marchenko said in a separate statement.

The restructuring of the state-run road operator Ukravtodor’s guaranteed eurobonds was also approved by creditors.

Owners of the sovereign notes accepted nominal losses of 37% of their holdings across 13 notes, forgoing $8.67-billion of claims, according to the terms of the deal. The agreement pushes back due dates for the bonds and reduces interest rates, a combination that Ukraine anticipates will save the economy $11.4-billion in the next three years.

Consensus was key as holders of at least two-thirds of the outstanding debt had to agree on a deal for it to be binding for all creditors, with a minimum of 50% threshold on each note. The participation level in each series of bonds ranged from 95% to 98.87%, according to the filling.

Ukraine’s new bonds will begin trading after the deal’s 30 August settlement date.

With no end in sight to the fighting, the debt deal was sealed after a two-year moratorium on payments to private creditors ended. Ukraine spends almost all of its domestic revenue on financing the war, with fiscal assistance from the European Union, the US and the International Monetary Fund used to cover social services.

Both the IMF and the bilateral creditors backing the debt deal were key to unlocking bondholders’ acceptance. They agreed on bondholders getting interest payments starting as soon as 2025, while the country will still be receiving disbursements under a $15.6-billion IMF loan that runs until early 2027.

An IMF team will meet Ukrainian officials next week to review the budget outlook and decide whether to disburse the next $1.1-billion from the aid programme.

The government also needs to renegotiate its debt with holders of $2.6-billion of GDP warrants, which have disbursements linked to economic performance, providing creditors with payments if gross domestic product expansion exceeds certain levels.

The government, which said it would “commit to ensure the fair and equitable treatment of holders,” on Tuesday imposed a temporary moratorium on payments on the instrument from 31 May next year. The country also temporarily suspended debt payments from the state-run energy grid operator Ukrenergo starting on 9 November.

Ukraine made a payment of about $200-million to holders of its GDP warrants on 1 August, including to Aurelius Capital Management and VR Capital Group.

Qatar said to be last bidder for Russia’s German Rosneft assets

Qatar is the last remaining bidder for the seized German operations of Russia’s state-controlled oil company Rosneft, according to people familiar with the matter.

A Qatari delegation visited Berlin’s chancellery for talks on the purchase in recent weeks, said the people, who asked not to be identified as the discussions are private. The German government would agree to the purchase, which means it’s now up to Rosneft and the buyer to seal the deal, they said.

Rosneft didn’t immediately respond to a Bloomberg request for comment, nor did the Qatar government. The German economy ministry said that a final decision has not yet been made.

A deal would put an end to a two-year legal and regulatory battle over the local Rosneft entities that Germany seized after Russia’s attack on Ukraine sparked a global energy crisis. In September 2022, the state put Rosneft Deutschland and RN Refining & Marketing under a temporary trusteeship, which has since been extended multiple times.

Chancellor Olaf Scholz received the Emir of Qatar in October last year, and the two countries are part of an energy partnership. Doha, in turn, maintains good relations with Russia, with the Qatar Investment Authority already owning a stake of roughly 19% in state-controlled Rosneft.

India’s Reliance Industries was among one or two other interested parties that have now stepped back from the bidding process, according to two of the people. A potential buyer had to come from outside the European Union to avoid financing issues related to sanctions. DM