Page 63 - UKRRptAug22

8.5.1 Fixed income - bond news
Ukraine energy giant Naftogaz defaults on foreign bonds. On July 26, state-owned gas giant Naftogaz missed the deadline to pay off $335 million in principal and interest payments as well as a separate interest installment of 45 million euros on another bond after creditors refused to postpone payments on the bonds for two years. A default on bonds "deprives Naftogaz of access to the international capital market," according to the company's statement. As a result, the government will have to take “full responsibility for raising the funds needed to import natural gas for the upcoming heating season.”
There are currently three outstanding Naftogaz Eurobond issues, all of which were placed in 2019, including a three-year issue of $335mn placed at 7.375% in July that year, a five-year issue of 600mn euros placed at 7.125% in July (with the EBRD buying up a fifth), and a seven-year issue of $500mn placed at 7.625% in November. The $335mn issue matured on July 19, 2022, when the company was also due to pay interest on these bonds and the bonds maturing in 2024.
Ukrainian Railways makes a coupon payment for Eurobonds. On July 11, the Ukrainian State Railway company (UZ) made the second and the last Eurobond coupon payment of $36M this year, announced the company’s CEO Oleksandr Kamyshin. According to the S&P rating agency, Ukrainian Railways’ future payments in 2022-2023 are relatively small and will amount to $125M in the next 12 months, including the $36M paid on Monday. The next big payment is due in 2024.
Ukrenergo and Ukravtodor will also ask creditors to postpone payments on Eurobonds. Ukraine expects a similar proposal from the state-owned electricity transmission system operator Ukrenergo and the State Highway Agency of Ukraine regarding their Eurobonds, issued under state guarantees, reported Interfax-Ukraine. In November 2021, Ukrenergo placed the debut five-year green Eurobonds for $825M under state guarantees `with a yield of 6.875% and interest payments twice a year. Ukravtodor placed $700M worth of Eurobonds with a rate of 6.25% under state guarantees in June last year.
Kondor Finance refuses to change the terms of Naftogaz Eurobonds. Naftogaz of Ukraine was not able to agree to change the credit terms with the issuer of its Eurobonds, Kondor Finance plc, according to a document from the Cabinet of Ministers of Ukraine. The document states that due to the unsatisfactory work of the board, Naftogaz did not conclude the transaction initiated by the company with Kondor Finance. Therefore, the Cabinet of Ministers instructed Naftogaz to agree with Kondor Finance on changes to the new terms. However, the government did not publish the latest conditions upon which the new agreement might be possible. At the same time, Naftogaz was obliged to consult with the government on its actions regarding the conclusion of the agreement with Kondor Finance.
Ukraine’s state-run Ukreximbank made its scheduled, regular 2025 Eurobond payment on July 22, lender’s press office tells Bloomberg News by email. Payment is equal to $26.21m, including principal amortization, coupon, bank says.
Ukravtodor is considering postponing payments on Eurobonds. The
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