Naftogaz says has not paid bond, seeks restructuring
Ukrainian state energy firm Naftogaz said on Thursday it had not repaid a $500 million Eurobond by its maturity deadline, causing rating agency Fitch to downgrade it to restricted default, according to Reuters.
The company, seen by foreign investors as a symbol of Ukraine`s stumbling fortunes, has been in talks with bondholders to restructure its entire foreign debt by swapping it for a new 5-year bond worth $1.65 billion with a 9.5 percent coupon.
Naftogaz has been at the centre of several gas price rows between Ukraine and Russia, the last of which in January this year led to Russian gas supplies, transiting across Ukraine, being cut to thousands of consumers in southern Europe.
But the company said on Thursday that Naftogaz`s debt problems would not affect the transit of Russian gas to Europe nor Kiev`s monthly payments for gas supplies.
"The process of debt restructuring will have no affect on Ukraine`s payments to Gazprom, domestic prices for consumers, or the stability of the transit of Russian gas to Europe," Naftogaz spokesman Valentyn Zemlyansky told Reuters.
Naftogaz confirmed it had paid out a regular coupon on the bond -- a move it hoped would pave the way for smooth restructuring talks. Several bond holders reacted positively on Wednesday to the proposal.
"The principal on the Eurobonds remains subject to a consent to exchange 100 percent of the bonds for new U.S. dollar-denominated bonds ... which will benefit from an irrevocable and unconditional sovereign guarantee from the Government of Ukraine," it said in a statement.
"Naftogaz of Ukraine continues to believe that the best course for bondholders is to review the proposal and carefully consider the terms of the offer," Naftogaz said.
Naftogaz has offered to swap the Eurobond and other bilateral foreign debts for a $1.65 billion bond due in September 2014 with a 9.5 percent coupon.
The coupon on this Eurobond was 8.125.