Ukraine's crunch talks with its biggest creditors moved into a second day Thursday as both sides sought a workable solution for keeping the former Soviet country from hurtling into default.
Two people close to the discussions told AFP that no deal was reached when Ukrainian Finance Minister Natalie Jaresko met debt managers of the Franklin Templeton investment giant near San Francisco on Wednesday.
Templeton and three other financial titans hold two-thirds of the $15.3 billion in savings that cash-strapped Ukraine is seeking on its total foreign debt over the coming four years.
The group has refused to accept any major reduction to its bonds' face value and wants a proposed maturity extension to expire as soon as Ukraine's imploding economy returns to growth.
Sources said the bondholders have put strict conditions on a proposed write-down of between five and 10 percent -- well off the 40 percent figure originally sought by Kiev.
Ukraine's US-born finance minister has since submitted a number of counter-proposals whose details remain private but reportedly include a smaller write-down request.
Kiev is next due to make a $60 million (54 million euro) Eurobond interest payment on August 23.
But it faces the much larger hurdle of covering $500 million in principal that matures on September 23.
The pro-Western government that emerged in the wake of the 2014 ouster of a Moscow-backed leadership has signalled repeated plans to impose a potentially devastating debt moratorium if no solution is reached within days.
"Time is running out," one source said ahead of the negotiations.
"There is a clause written into the September 23 repayment which states that any changes to the payment must be approved by the bondholders at least 21 days before the payment is due," the person told AFP.
A $40 billion IMF-led rescue programme requires Ukraine to restructure the $15.3 billion in order to keep down its debt-to-growth ratio and be able to tap into foreign money markets by the end of 2017.
An agreement with the four members of the Templeton-led group could open the door to similar deals being struck with several additional bondholders who are negotiating on their own.
All these arrangements must be signed by September 2 in order to keep Ukraine from entering a so-called "hard default" that could potentially shut it out of global borrowing markets for years to come.
Bloomberg data showed Ukraine's Eurobonds climbing to their highest level in more than a week on expectations of an imminent debt deal announcement.
- Templeton under pressure -
The commercial lenders argue that Kiev is under-reporting the size of its expected 2016 economic bounceback from a contraction that should reach about nine percent this year.
They demand higher coupon payments in return for any big restructuring deal. The creditors also expect Kiev -- now mainly making payments on interest -- to resume covering its maturing principal as early as next year.
Some analysts expect Ukraine to seek a temporary debt maturity extensions that could provide all sides more time to talk.
But both the International Monetary Fund and Washington have mounted pressure on lenders to accept sacrifices for the benefit of the war-torn east European state.
Billionaire George Soros -- famous for making a daring currency bet against the Bank of England as well as supporting countries emerging from decades of communist rule -- said the creditors were doing themselves a disserves by rejecting any short-term sacrifice.
"When a country and its lenders can reach a speedy deal, even one that imposes losses on lenders, the country is usually back in the market in a year or two," Soros wrote in a commentary for The Wall Street Journal.
"Former US Treasury Secretary Nicholas Brady understood this when he unveiled the Brady Plan in 1989, which urged banks to accept debt relief, at least for those Latin American countries pursuing sensible reforms," Soros noted.
"Today, Mr Brady is chairman of Ukraine’s largest bondholder, Franklin Templeton, which is pressing hard against debt relief. It is difficult to reconcile his position in 1989 with Franklin Templeton's position today."