Naftogaz is out of default
Naftogaz of Ukraine has resumed payments on Eurobonds maturing in 2022 and 2026 after restructuring them and therefore has come out of default, the company said in a statement.
"The official exit from the default on the 2022/26 Eurobonds allows us to consider new financing for the group's capital investment plan. This was preceded by extensive work with investors. We are grateful to our international partners for their cooperation and trust," said Oleksiy Chernyshov, Chairman of the Board of Naftogaz.
In 2019, Naftogaz placed three issues of Eurobonds: three-year Eurobonds for $335 million at 7.375%, five-year Eurobonds for €600 million at 7.125%, and seven-year Eurobonds for $500 million at 7.625%.
In the summer of 2022, Naftogaz of Ukraine failed to make a payment on its Eurobonds, defaulting. In a statement, the company, then headed by Yuriy Vitrenko, claimed that it had the money to pay off its bondholders, but the Cabinet of Ministers did not allow it to do so.
In August 2022, Naftogaz agreed with the holders of Eurobonds maturing in July 2024 to postpone payments until 2026.
In the spring and summer of 2023, the company reached an agreement with the bondholders and the Ukrainian government to restructure the remaining overdue bonds.
The company offered to pay 5% of the principal, overdue interest, last year's overdue payment and additional interest to the holders of the defaulted $335 million Eurobonds 2022, which Naftogaz had to repay last year.
Naftogaz is to pay 50% of the remaining principal in July 2024 and another 50% in July 2025. The interest due in January 2024 will be deferred until July 2024 with the possibility of capitalisation, and the interest rate on the 2022 Eurobonds will increase to 7.65% after the restructuring.
The company offered to pay 0.5% of the principal to the holders of the $500 million Eurobond due in 2026 for agreeing to the restructuring. Under the terms of the restructuring, Naftogaz will be able to repay the securities in equal instalments in November 2027 and November 2028. Interest payments will resume in 2024.