The Ukrainian authorities are considering the possibility of restructuring its foreign debt, Bloomberg has reported, citing sources.

According to the agency, Ukraine has time until September 1, when it will have to pay $1.4bn of state debt including interest. One of the options under discussion is the use of frozen Russian assets as collateral, kommersant.ru reported

According to Bloomberg, Ukraine’s dollar and Eurobonds maturing in September are traded at a discount of more than 40 percent to their face value. According to the agency, this indicates a crisis and the risk of restructuring. Nevertheless, the Ukrainian government has said it is committed to servicing its debt obligations. Bloomberg believes that the Ukrainian authorities want to maintain good relations with global investors in order, in particular, to be able to finance the country’s recovery.

Bloomberg’s interlocutors say the Ukrainian government is considering several scenarios. One of them suggests that the issuer could ask the bondholder to approve a change in the terms of the issued securities. Another scenario is to use frozen Russian assets as collateral. The agency’s sources note that “the legal viability of such an idea is unclear”.

A final decision from Ukraine is not expected before the end of summer. According to two Bloomberg sources, the International Monetary Fund (IMF) has offered Ukraine to analyze its financial situation. A spokesman for the fund did not comment on the possibility of restructuring Ukraine’s state debt. The IMF spokesman said that the fund’s staff continues to interact with the Ukrainian authorities. The Ukrainian Finance Ministry declined to comment.