Ukraine’s government is nearing a restructuring deal with its creditors that would call for a 20% reduction in the value of the country’s bonds, marking a possible breakthrough in negotiations that have been deadlocked for months, according to people familiar with the matter.

Since March, the Ukrainian government has been locked in tense restructuring talks with a group of creditors who hold almost half the country’s outstanding debt. The two sides have yet to complete the details of how the 20% reduction in the value of the...