The state company Naftogaz Ukrainy declared a default on its debt obligations – the company was unable to agree with creditors on the restructuring of payments during the grace period. This is stated in the message of the Ukrainian oil and gas company.
The grace period deadline ended on July 26, by which time the company had to repay $335 million on a bond issue due in 2022 and €45 million on an issue due in 2024. At the same time, the company could have avoided default, since the necessary funds are available on the balance sheet, but the government commission forbade the transfer of this money in order to ensure the uninterrupted operation of the company during the winter period.
“Thus, the government went into default on the Eurobonds of NJSC Naftogaz Ukrainy, ” the company’s message cites the publication.
Naftogaz also noted that now the company has lost access to foreign capital markets, and the reputation of the company and the Ukrainian government will be undermined. Sources of Ukrainska Pravda in the Cabinet explained that the agreement to repay loans from Naftogaz could cause resentment among foreign creditors who had previously agreed to restructure Ukraine's public debt.
Naftogaz held two rounds of negotiations with its creditors, but both ended in failure – they refused to restructure the company's loans. The company asked to postpone payments on its obligations of $1.5 billion for two years. At the moment, the company has three bond issues: the first part (for $335 million at 7.375%) should have been paid back on July 18, 2022. Two more issues (for €600 million at 7.125% and $500 million with a yield of 7.625%) should be repaid in 5 and 7 years respectively.