With effect from 26 March 2016, the National Bank of Ukraine (the “NBU“) has excluded export-credit agency loans from cross-border loan prepayment restrictions and made several adjustments that, among other, enable the parties to modify interest payment terms of cross-border loans.
According to the amendments, general restrictions on prepayment of cross-border loans no longer apply to prepayment of loans (or their portions) provided with the participation of a foreign export-credit agency.
As regards the interest-payment adjustments, prior to the amendments, a conservative interpretation of the respective NBU resolution suggested that amending interest payment dates (for example, changing 6-month interest periods to 3-month interest periods) falls under the prohibition on amending terms of a loan agreement to provide for earlier payment dates. As a result, in many cross-border debt-restructuring deals involving changes to interest payment schedule parties could face issues with the NBU registration required in Ukraine.
As amended with effect from 26 March 2016, the relevant NBU resolution specifically allows for:
- changing interest payment schedule (1) from annual interest payment periods to quarterly or monthly periods; or (2) from quarterly interest payment periods to monthly periods;
- bringing interest payment dates forward by not more than 180 days.
While the adopted changes will slightly increase flexibility available to the parties in cross-border loan transactions, the key restrictions, which remain in effect, will still lead to implementation issues, which need to be addressed.