Ukrainian govt grants new permission to Naftogaz to amend Eurobond issue terms

MOSCOW. Aug 1 (Interfax) - Naftogaz of Ukraine, which defaulted on two of its three outstanding Eurobond issues last week because of the government's decision not to approve payments on them, has been granted permission to amend the lending contracts related to those Eurobonds.

Ukrainian media have reported that the Cabinet of Ministers published relevant directive No. 670 dated August 1 on its website the same day.

The document does not specify the amendments proposed.

Following the default on July 26, Naftogaz reported the next day that it would immediately offer a new deferred payments agreement to the Eurobond holders. "This process should be a part of joint actions by the government and other state-owned companies to propose similar terms for deferred payments on Eurobonds," the company said in a statement. However, no new offer has yet been made public.

As reported earlier, the Ukrainian Cabinet on July 21 recognized as unsatisfactory the work of the Naftogaz board with the issuer of its Eurobonds, Kondor Finance plc, to change the terms of the securities and obliged the company to conclude a new contract with Kondor Finance on terms set by the government. The terms themselves were not indicated in the directive.

There are currently three outstanding Naftogaz Eurobond issues, all of which were placed in 2019, including a three-year issue of $335 million placed at 7.375% in July that year, a five-year issue of 600 million euros placed at 7.125% in July (with the EBRD buying up a fifth), and a seven-year issue of $500 million placed at 7.625% in November. The $335 million issue matured on July 19, 2022, when the company was also due to pay interest on these bonds and the bonds maturing in 2024. The grace period for the payments ended July 26.

Naftogaz had proposed to pay all coupons on the 2022 and 2024 bonds on July 19, 2024 and to redeem the 2022 bonds the same day. The company wanted to pay the coupons on the 2026 bonds on November 8, 2024. However, the holders of said Eurobonds declined that offer.