Ukraine sends new debt proposal to creditors in 'decisive' week - ministry

KIEV (Reuters) - Ukraine's Finance Ministry said on Tuesday it had sent a fresh debt restructuring proposal to a group of its largest creditors, which it invited to a high-level meeting on Thursday for "decisive" negotiations.

Talks to restructure $23 billion (£14.7 billion) of Ukraine's sovereign and quasi-sovereign debt have dragged on for more than four months over a disagreement over the necessity of a writedown on the principal of the bonds, but on Friday a source said Kiev saw this week as a deadline to reach a deal.

A new proposal was sent to the creditor group on Tuesday morning, the Finance Ministry said in an emailed statement.

"Given the legal considerations around timely implementation of the proposal, this week will be decisive for the negotiations. Accordingly, the ministry has called on creditors to attend at the highest level a meeting in London on Thursday," it said.

Reuters reported on Thursday that the latest proposals from creditors envisaged a 5 percent haircut, in what seemed like a softening in their stance.

Kiev insists a writedown of the principal is essential, but it is unclear if its latest proposal amends its original desire for a 40 percent writedown. The Finance Ministry has threatened to halt payments if a deal is not reached soon.

A $500 million bond matures on September 23.

"They will try and find an agreement on Thursday, but if they don’t I would be quite nervous about what would happen, then we are getting into a new territory," Jakob Christensen, senior economist at Exotix, told Reuters.

"They (Kiev) have pressed on numerous occasions that they would look at imposing a moratorium ahead of the September issue if they could not find an agreement," he said.

Eurobonds, which have risen steadily over the past weeks on expectations that an agreement will be reached, were trading unchanged following the Finance Ministry statement.

(Reporting by Alessandra Prentice; Additional reporting by Karin Strohecker in London; Editing by Alison Williams)