The National Bank of Ukraine (NBU) gradually continues to lift martial law limitations for cross-border borrowings.

Previously, the NBU allowed for Ukrainian borrowers to make some “Permitted Repayments,” under loans provided or covered by Export-credit agencies, International financial institutions or other sovereign-related creditors (“Institutional Lenders”).

Starting from 21 June 2023, additionally it will be allowed to make cross-border payments from Ukraine under new loans granted by any other foreign creditors, subject to the following conditions:

1. Loan funds were transferred from abroad to the borrower’s accounts opened in Ukraine after 20 June 2023.

2. The total cost of service payments under the loan (i.e., interest, fees, other payments, etc.) may not exceed the maximum rate of 12 percent per year.

3. (a) For loans with tenor of up to three years, any payments under the loan (e.g., interest, principal, fees, other payments, etc.) could be made from foreign currency funds accumulated by the borrower (but not purchased on the FX market or received as a loan).

    (b) For loans with tenor of three or more years, payments of interest, fees and other payments (except for the principal) could be made from foreign currency purchased on the FX market in Ukraine from the outset. The principal indebtedness should be paid from borrower’s own foreign currency funds within first three years of the maturity term and starting from the fourth year (also from foreign currency funds purchased on the FX market in Ukraine).

4. Same as with Permitted Repayments, repayments can only be carried out upon maturity of the loan as set out in the loan documentation, Ukrainian servicing banks are prohibited from servicing repayments under shortened terms.

The above changes come into force starting from 21 June 2023.

Repayments under loans provided before 20 June 2023 are still restricted (save for the Permitted Repayments to the Institutional Lenders). It is therefore advisable for the lenders under such loans to keep their claims and security in good order until the conditions for debt restructuring arise.

Source: NBU Resolution No. 77 dated 20 June 2023 “On amendments to Resolution of the National Bank of Ukraine No. 18 dated 24 February 2022”