Kyiv: Ukraine has launched a significant new phase in its post-war financial recovery by formally proposing the restructuring of its GDP-linked warrants a move aimed at easing long-term debt burdens and restoring economic stability. The proposal, covering approximately $3.2 billion in outstanding warrants, immediately sparked intense reactions in global markets, with the instruments surging to their highest value in more than four years.
Under the restructuring plan, the Ukrainian government has offered warrant holders a swap into newly issued “C Bonds”, carrying fixed interest and maturing between 2030 and 2032. These new securities would replace the current growth-linked instruments, which require large payouts if Ukraine’s GDP expands beyond specific thresholds.
To make the offer more attractive, Kyiv has also proposed a one-time cash compensation, capped at $180 million, for investors who voluntarily participate. Early responders may also receive slightly improved yield terms. The proposal is designed to replace unpredictable liabilities with clear, time-bound obligations and to bring Ukraine closer to closing the chapter on its multiyear debt crisis.
The GDP-linked warrants have long been seen as a potential fiscal hazard. If Ukraine’s post-war reconstruction triggers a strong economic rebound, the payout obligations could balloon, placing enormous strain on the treasury. By restructuring now, Kyiv aims to prevent future repayment shocks and establish a stable foundation for rebuilding vital infrastructure.
This plan also forms a crucial piece of Ukraine’s broader debt strategy. After defaulting in 2022 due to the Russian invasion, Kyiv restructured nearly $20 billion in international debt. The warrants are the last major liability still hanging over its financial system. Removing or renegotiating them is considered essential for securing further international assistance and attracting new investments.
The restructuring announcement immediately sent the warrants jumping over 4 cents, taking them to roughly 97 cents on the dollar their best performance since 2021. Investors interpreted the proposal as a sign of renewed confidence in Ukraine’s economic recovery, though many remain cautious about the final terms.
The influential Ad Hoc Group of major warrant holders has acknowledged the proposal and is expected to issue a stance once technical details are finalized. Ukraine requires at least 75% approval from warrant holders for the restructuring to be legally binding.
Despite the positive market response, challenges remain. Some investors may resist the proposal if they perceive the long-term value of GDP-linked payouts to be higher than the replacement bonds. Ongoing war-related uncertainty also complicates the economic forecasts on which such assessments depend.
The government, however, faces pressure to complete the restructuring before the end of 2025 to avoid large contingent liabilities in the next fiscal year. Officials argue that without this step, Ukraine’s recovery plan and budget projections would remain vulnerable to volatility.
If successful, the restructuring could mark a turning point for Ukraine’s battered economy. It would reduce uncertainty, strengthen public finances, and reinforce the credibility of ongoing economic reforms. It may also help unlock future international financing and reassure foreign investors seeking stability in Ukraine’s markets.
Conversely, failure to secure adequate participation could leave Ukraine burdened with unpredictable future payouts, complicating reconstruction plans at a time when massive investments are needed for infrastructure, housing, energy, and defense.
As Kyiv navigates this crucial period, the success of the GDP-warrant restructuring will play a decisive role in determining whether the country can transition from wartime survival to long-term financial recovery and stability.