Page 15 - FSUOGM Week 29 2022

FSUOGM NEWS IN BRIEF FSUOGM

Naftogaz surprised by strategist at Bluebay Asset Management. Gazprom’s dividend cancellation decision,
as it opted to raise extra taxes from
One option may be to use the $300mn of
government's order to delay frozen cash belonging to the Central Bank the company instead. The FinMin also
reportedly feared what effect the conversion
of Russia (CBR). If Ukraine defaults on its
bond repayment debt then that opens up the possibility of of export Forex revenues of Gazprom into
the bond holders taking the case to court,
rubles would have on the already over-
Naftogaz, Ukraine's state-owned energy which could legally seize part of the CBR’s appreciated national currency.
company, revealed that the government money if it can be shown that Russia is to
order to delay debt payments last week blame for the default.
came as a surprise, Bloomberg reported on In addition, European Commission Uzbekistan aims to
July 15. President Ursula von der Leyen said on June
The company asked bondholders for a 7 that the EU is “working on a mechanism” increase gas and gasoline
two-year payment freeze on $1.4bn of its to legally seize this money, which would
bonds, including a $335mn 2022 Eurobond mean avoiding default entirely. The imports from Turkmenistan
coupon payment due on July 19, citing the option was brought up again at a Ukraine
need to preserve money to buy gas. Reconstruction Conference in Switzerland Uzbekistan has expressed interest in deepening
However, chief executive officer Yuriy earlier this month. SOEs to pay at least 50% cooperation with Turkmenistan, in particular in
Vitrenko told Bloomberg in an interview of their profit in dividends, which along the energy sector.
that Kyiv’s decision was unexpected. with contributing to the state budget has During negotiations held during the visit of
“We had been planning our finances in improved their investment cases. Turkmen Pesident Serdar Berdimuhamedov to
a way that would allow [us] both to redeem However, as the fallout from Russia’s Tashkent on July 14, the Uzbek side announced
Eurobonds and buy gas,” he said. military invasion spread, a cascade of its intention to ramp up the import of Turkmen
The payment freeze would have dividend cancellations from Russia’s largest electricity, gas and petroleum products.
saved Naftogaz $546.6mn, according blue chips followed, with that of gas giant Uzbekistan’s President Shavkat Mirziyoyev
to Bloomberg calculations. However, Gazprom hurting local investors the most. noted that the development of cooperation with
bondholders were advised by legal firm Siluanov reiterated that the dividends the Turkmen side was among the priorities for his
Dechert to reject the request, as they still remain a major source of revenue for the country, adding that there were opportunities to
viewed the company as a profitable going budget, as well as an incentive for the double the volume of bilateral trade in the coming
concern. companies to manage the rest of the profit years.
As such, it is unclear whether Naftogaz more effectively. To ramp up trade turnover, a cross-border
will pay the debt or go into default. Vitrenko “This is the first public comment on trade zone is to be created on the Uzbek-Turkmen
said the company is communicating with its Gazprom’s dividend cancellation,” BCS border.
largest bondholders about the offer that will Global Markets commented on July 12, The presidents also touched upon the
be voted on July 21 but could extend to July while adding that the statement is “only a importance of expanding transport links. The
26 due to a five-day grace period. small positive”, being a reiteration of pre- volume of cargo transportation in 2021 increased
“I hope that bondholders understand invasion policy fully expected from a top by 17%. To ensure its further growth, the parties
that this is not a normal situation, government official. intend to create favourable conditions and
this is war,” he said. “But even in such BCS GM believes that the equity market introduce mutual benefits and discounts.
circumstances, we try to be honest with is unlikely to believe that the entire episode The business circles of the two countries
our bondholders. I have calls with them, in of Gazprom dividends being withheld is at the forum on the eve of the visit concluded
which I apologise that this was done last- indeed a ‘one-off’ never to be repeated, investment and trade agreements totalling
minute and is a real mess.” and as such will adjust downwards, likely $451mn.
A default would likely have severe permanently, its expectations of Gazprom’s
damaging long-term effects on Ukraine’s dividends.
economy and be a “PR win for Moscow”, To remind, the Finance Ministry is
according to Timothy Ash, a senior believed to have taken an active role in

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