Currently no need to delay redemption of Naftogaz Eurobonds maturing in 2024 and 2026 - company
MOSCOW. July 20 (Interfax) - Ukraine's state-owned energy firm NJSC Naftogaz of Ukraine has confirmed its July 11 request for the holders of its Eurobonds to delay coupon payments for two years, saying that this proposal has been prompted by the need to get ready for the upcoming heating season.
"Since these proposals were put forth by Naftogaz in line with the strategic goals of the government for the 2022/2023 fall-winter season, the management of Naftogaz believes that it is not necessary at this point to postpone the redemption of the principal debt with regard to the bonds maturing in 2024 and 2026," the company said in its stock exchange report on Wednesday.
Furthermore, in accordance with the government's executive order, dated June 17, 2022, Naftogaz will have to acquire up to 5.1 billion cubic meters of imported natural gas for more than 260 billion hryvni (about $8.9 billion), the company said.
"Naftogaz also shall supply natural gas to the least protected consumers (primarily the population of Ukraine) at the set prices, which on most occasions are far lower than the market prices for natural gas in Ukraine and in Europe. Thus, in order to fulfill the government's executive order, Naftogaz intends to spend its working capital on purchasing imported gas instead of making payments on the bonds in line with their current terms," it said.
As reported, Naftogaz of Ukraine asked the holders of roughly $1.5 billion of its Eurobonds to delay coupon payments for two years and to extend its notes worth $335 million maturing on July 19 for two years.
Three issues of Naftogaz Eurobonds are circulating on the market, all of them placed in 2019: in July - three-year bonds for $335 million at 7.375% and five-year bonds for 600 million euros at 7.125% (a fifth of the bonds in euros bought by the EBRD), and in November - seven-year bonds for 500 million euros with a yield of 7.625%. The $335-million issue matures on July 19, 2022, when coupon payments on these securities and the 2024 Eurobonds are also due.
Naftogaz proposes paying all coupons on 2022 and 2024 Eurobonds on July 19, 2024, and redeeming 2022 Eurobonds on the same day. Meanwhile, the company could like to pay coupons on its 2026 Eurobonds on November 8, 2024.
The Eurobond holders have until July 21 to make their decision, which will be announced at their meeting set for July 26.