Ukraine's overseas creditors have backed its request for a two-year freeze on payments on almost $20 billion in international bonds, according to a regulatory filing on Wednesday, a move that will allow the war-torn country to avoid a debt default.

With no sign of peace or a ceasefire on the horizon nearly six months after Russia's invasion began on Feb. 24, bondholders have agreed to postpone sovereign interest and capital payments for 13 Ukrainian sovereign bonds maturing between 2022 and 2033.

The government in Kyiv launched a consent solicitation, which is a formal request to agree with creditors on changes to sovereign debt contracts, on July 20.

Ukraine said it would save around $5 billion over the next 24 months as it manages its dwindling financial resources.

BlackRock Inc, Fidelity International, Amia Capital and Gemsstock Ltd are among the biggest holders of Ukraine's debt, whose value has slumped by more than 80% since a build-up of Russian troops on its borders began late in 2021.

Any modification needed approval by the holders of at least two-thirds of all the bonds and more than 50% of each issue outstanding, documents for the consent solicitation showed.

"Ukraine has received and accepted consents of around 75% of the aggregate principal amount of the outstanding securities," the filing said.

A separate consent solicitation approved by creditors includes changes to about $2.6 billion of so-called GDP warrants, a derivative security that triggers payments linked to a country's gross domestic product.

DEBT RELIEF

Some of the world's largest investment firms are not the only creditors to have agreed to freeze Ukraine's debt payments.

With the country facing an estimated 35% to 45% economic contraction in 2022, bilateral creditors including the United States, Britain and Japan backed a debt repayment delay and a group of governments in the Paris Club agreed to suspend payments until the end of 2023.

"This will improve the foreign currency cash flow for Ukraine, but by itself it's unlikely to be sufficient to stabilize FX reserves," said Carlos de Sousa, emerging markets debt portfolio manager at Vontobel Asset Management.

Ukraine's international reserves fell from $28.1 billion in March to $22.4 billion as of the end of July.

A comprehensive debt restructuring is expected following the debt freeze, De Sousa said, as it is "unlikely" that Ukraine will be able to regain market access in two years.

Ukraine completed a $15 billion debt restructuring in late 2015 after an economic crisis linked to a Russian-backed insurgency in its industrial east. The deal left it with a large number of payments due annually between 2019 and 2027, and it returned to international markets in 2017.

With a monthly fiscal shortfall of $5 billion, Ukraine is heavily reliant on foreign financing from Western allies and multilateral lenders including International Monetary Fund (IMF) and the World Bank.

It has so far received $12.7 billion in loans and grants, 44% of the total financing committed since Russia's invasion began, Finance Ministry data shows.

The United States said this week it would provide an additional $4.5 billion to Ukraine's government, bringing its total budgetary support since Moscow began what it calls a "special military operation" to $8.5 billion.

Ukraine also aims to agree a $15 billion-$20 billion IMF programme to help shore up its economy, its central bank governor Kyrylo Shevchenko said, and the government expects to receive this assistance before the year-end.