Ukraine vows to fight Russian US$3 billion debt claim in London court

KIEV (AGENCE FRANCE-PRESSE) - Kiev vowed on Thursday (Feb 18) to "decisively" fight Russia's demand for the full repayment of a US$3 billion (S$4.2 billion) loan it issued to Ukraine under since-ousted Moscow-backed president Viktor Yanukovych in 2013.

Russia on Wednesday filed a lawsuit with the High Court in London after the two sides failed to reach a private settlement over the debt.

The eurobond was issued on the Irish Stock Exchange and is governed by English law.

"Ukraine intends and is fully ready to decisively defend its interests concerning these eurobonds in the English court," the finance ministry said in a statement.

Kiev had been due to repay the eurobond purchased by Moscow from Kiev on December 21. But it viewed Russia's loan as private debt that fell under the restructuring terms it agreed with other commercial lenders last year. That deal included a 20 per cent writeoff and extended the loans' repayment terms until 2027.

The International Monetary Fund has sided with Russia by ruling that the loan carried official rather than commercial status.

Yet the Fund also amended its policy so that it could carry on issuing tranche payments under its four-year US$17.5 billion Ukrainian rescue package even though the former Soviet country is now formally in default.

The new leadership that took power after Ukraine's February 2014 pro-Western revolution has branded the Russian loan as a bribe paid to Yanukovych for his decision to abruptly reject a landmark Eropean Union free trade and political association pact in 2013. That deal has since been ratified and went into effect at the start of the year. Moscow's Vedomosti business daily reported that Russia is also seeking incurred interests payments and Ukraine's full coverage of all upcoming court fees. It was not immediately clear when the London court intended to rule on the dispute.