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Ukraine Wants to Use US Guarantees to Borrow $1B in November

  • Reuters

FILE - President Petro Poroshenko in Kyiv, Ukraine, July 1, 2015.

FILE - President Petro Poroshenko in Kyiv, Ukraine, July 1, 2015.

Heavily indebted Ukraine may borrow $1 billion in November via a new sale of U.S.-backed bonds, part of a broader international support package Kyiv expects to receive by the end of the year.

The finance ministry said on Wednesday it anticipated international assistance worth more than $3.2 billion up to the end of 2015, including $1 billion of U.S. guarantees in November.

It also expects to receive two credit payments of $500 million a piece from the World Bank in August and September and 600 million euros from the European Commission.

"It may be a new $1 billion issue of a U.S.-backed Eurobond, not earlier than in November," said a ministry source.

The finance ministry could not immediately confirm or deny the report of a possible bond sale.

Washington announced earlier this year that it could provide up $2 billion in loan guarantees to near-bankrupt Ukraine.

Kyiv used the first tranche of the guarantees to back a $1 billion five-year Eurobond issue in May. Citigroup, JP Morgan and Morgan Stanley led the deal.

Ukraine's budget has swallowed up $4.7 billion of external financing since the start of the year.

Major donors to the country said financing would be contingent on the former Soviet republic remaining on track to meet the conditions of its loan program from the International Monetary Fund.

The IMF approved a $17.5-billion bailout program in March to support reforms in Ukraine, whose economy has been damaged by a 15-month military conflict with Russia-backed separatists.

Kyiv expects the lender to decide on July 31 whether to disburse a second tranche of financial aid worth $1.7 billion.

Ukraine so far has received $5 billion from the IMF. Ukraine is continuing talks with creditors on restructuring $23 billion of external debt.