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Kyiv has reached an agreement in principle with some of its creditors to restructure the country's external debt, amounting to around $23 billion, the authorities said on July 22.

Ukraine struck a deal with its creditors at the onset of the Russian full-scale invasion to postpone the payments due to the war's pressure on the country's economy. The deal to freeze payments of around $23 billion was about to expire on Aug. 1.

"Today, we reached an agreement in principle with the committee of Eurobond holders," Prime Minister Denys Shmyhal said. Based on the deal, Ukraine stands to save $11.4 billion over the next three years and $22.75 billion by 2033, he explained.

"The government reached an agreement in principle with a group of investors holding c. 25% of bonds," Olena Bilan, the chief economist at Kyiv-based investment bank Dragon Capital, told the Kyiv Independent.

These investors included Amundi SA, BlackRock Inc, and Amia Capital LLP, according to Bloomberg.

"To finalize the restructuring process, (the government) needs to get consent from the majority of bondholders. For this, the government will launch a formal voting process soon," Bilan added.

"Freed funds will support the macro-financial stability of Ukraine, allowing us to finance the most urgent needs in the face of full-scale Russian invasion," Finance Minister Serhii Marchenko commented.

The restructuring agreement will see the existing Eurobonds in circulation exchanged for a package of new Eurobonds with a 37% nominal reduction in the value of the debt at the initial stage and a reduction in the net present value of the debt of around 60%, the Finance Ministry said in a statement.

While the first round of negotiations with private creditors in June ended without an agreement, Marchenko voiced confidence last week that a deal could be reached before the deadline.

Without the deal, Ukraine would have to begin payments within a 10-day period of Aug. 1 or officially default.

The Ukrainian parliament approved a bill on July 18 granting the government the right to suspend payments on external public debt until Oct. 1.

"Once completed, this restructuring will also pave the way for Ukraine's market re-entry as soon as possible when the security situation stabilizes to fund our country's swift recovery and reconstruction," Marchenko commented.

Opinion: Restructuring Ukrainian debt is a step toward democratic victory

Ukraines victory is the victory of the entire free world over dictators and tyrants. The formula for victory is well known: the strength of the Ukrainian army, the unity of the free world, unwavering long-term military and financial support for Ukraine, and, first and foremost, Ukraines membership

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Ukraine reaches preliminary deal with bondholders on debt restructuring. - Kyiv Independent