Ukraine Halts Payment on $3bn Debt to Russia

Ukraine announced on Friday it would not make payment on its $3 billion debt to Russia due this weekend, deepening a row with Moscow which said it would take Kiev to court.

"The Ukranian government is imposing a moratorium on repaying the so-called Russian debt," Prime Minister Arseniy Yatsenyuk told a government meeting. 

"From today we are halting payments on this debt," he said, essentially confirming that Kiev will default on the bond when the Sunday payment deadline arrives. 

Moscow and Kiev have been locked in a bitter showdown over a Russian $3 billion loan  granted to the pro-Moscow regime of  ex-president Viktor Yanukovych in December 2013, not long before he was ousted and fled to Russia.

Ukrainian authorities insist that it is not a sovereign loan of one state to another, but rather a transaction made via the financial markets and subject to financial terms agreed with other creditors.

Kiev had reached a restructuring deal in August with its private creditors -- including major banks and investment funds -- who agreed to a 20 percent cut.

Moscow however maintains that the loan cannot be considered private debt and has refused such conditions.

"Russia has refused, despite our repeated attempts to sign the agreement for restructuring, to accept our proposals," Yatsenyuk explained.

"I stress, once again, that we are ready for a legal process with the Russian side," he said.