Wars are expensive, and Russia’s invasion has cost Ukraine billions of dollars. Kyiv was already in a complex debt situation going into the war, having restructured its private debt in 2015 after Russia annexed Crimea the previous year. But the country must now balance borrowing to fund the war with managing old debt obligations.

Doing so is a tricky juggling act. Kyiv has to meet the fiscal expectations of sovereign and multilateral creditors, whose funding is supporting the war effort and keeping the economy alive. Simultaneously, it needs to remain alluring to private investors, whose cash flows will be crucial to the day after the war — when reconstruction must begin in earnest. But those goals are clashing as Ukraine grapples with $20bn of outstanding private bonds.

Private creditors, mostly US institutional investors such as Pimco, were generous to pause debt payments after Russia’s invasion. But the war has gone on longer than expected, and payments are set to resume in August. Last week, a committee of bondholders rejected Ukraine’s G7-approved proposal to reduce the overall value of the debt by 60 per cent and to shrink the annual coupon payments. Their counterproposal of a 22 per cent haircut and 7.75 per cent coupon threatens to pull capital away from Ukraine when it is desperately needed, and could cause it to miss debt reduction targets required for a $15.6bn IMF funding facility.