KIEV, Aug. 13 - 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 signaled 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 program 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. (afp/ez)