A Ukrainian Eurobond held by Russia and due for redemption in December is "official" debt, and for that reason Russia is not taking part in restructuring talks Ukraine has held with private creditors, Russia's finance minister said on Wednesday. Anton Siluanov told journalists that Moscow would take legal measures if Kiev did not repay the debt on time.
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Russia's longstanding position is that the $3 billion Ukrainian Eurobond should be classified as official intergovernmental debt and is therefore subject to different rules than for sovereign debt owned by private firms."Ukraine's debt to Russia which is due to be redeemed in December of this year cannot be treated as a debt before private creditors, the debt has another status, it is official" Siluanov said.

"The Ukrainian authorities have been repeatedly informed by the Russian side that Russia expects repayment of the debt fully and on time," he said.

Ukraine insists it will not pay the debt in full or offer better repayment terms than those offered to other creditors in restructuring talks. Efforts to restructure Ukraine's debt are seen as crucial to shore up its war-torn economy, following a conflict between government forces and pro-Russian separatists in the east. A deal would allow Kiev to plug a $15 billion funding gap under an International Monetary Fund-led $40 billion bailout programme.

The IMF has not yet decided whether it views the Eurobond held by Russia and issued when pro-Russian former Ukrainian president Viktor Yanukovich was still in power as official debt.

Moscow bought the bond from Kiev in December 2013 as part of a plan to rescue Yanukovich in the face of street opposition to his rule. He fled two months later as protests widened, opening a rift between Moscow and the new pro-European leaders who followed him.

Via Reuters