Ukrainian oil and gas monopoly defaulted on Eurobonds. Who is next?

Government of Ukraine decided “Default” by not allowing Naftogaz to pay Eurobond holders principal and interest (for issuance of 2022) and interest (for issuance of 2024). The Wall Street Journal believes this will start a chain reaction in the economy and financial system of the republic.

“The government has defaulted on Naftogaz Ukrainy’s Eurobonds. As its failure to meet its Eurobond obligations de facto deprived Naftogaz of access to the international capital market, by banning its payments, the government de facto assumed responsibility for raising the necessary funds for natural gas imports for the 2022/2023 heating season,” the company said in a statement.

On July 22, Naftogaz sent a request to the government to approve Eurobond payments, but this request was not satisfied. An additional request to approve such a payment was also submitted on 23 July.

On July 25, investors refused Giving Naftogaz a two-year grace period on Eurobond payments that the company plans to avoid going into default. These are Eurobond issuances of 335 million dollars in 2022, 600 million euros in 2024 and 500 million dollars in 2026.

alarm signal

The Wall Street Journal predicted a chain reaction in the Ukrainian economy and financial system against the background of the default of the energy monopoly. According to the publication, the total amount of liabilities under Eurobond is more than $1.4 billion.

Naftogaz is one of Ukraine’s largest taxpayers and plays an important role in the country’s economy. The newspaper states that if Eurobond holders demand an expedited repayment, this could worsen the situation for the gas company as a whole.

Is there natural gas in Ukraine?

On the afternoon of July 26, Ukrainian Prime Minister Denys Shmyhal announced that the government intends to request a “gas loan” from the United States. He stressed that this is necessary “for the stable transition of the heating season”.

“Preparations continue for the toughest winter in our history, and in this preparation we are looking for all possible means to be ready for any scenario,” said the Prime Minister.

About the agreement between the Ukrainian and American authorities earlier reported Foreign Policy edition. With such an agreement, the United States should supply Ukraine with six billion cubic meters of LNG. Since Kiev does not have its own terminals, gas will be brought to Europe and enter the country via a pipeline. Ukrainian side plans to pay Washington after domestic gas production is increased

The situation in the gas market

By Tuesday evening, the spot price of gas in Europe exceeded $2,200 per thousand cubic meters in anticipation of shutting down another gas turbine engine in Nord Stream and reducing supply. European officials and energy companies have accused Gazprom of using gas as a weapon, saying they have lost confidence in the company.

On the morning of July 26, European Commissioner for Energy Kadri Simson statedHe said Gazprom’s plan for another gas supply cut is a sign that gas supplies from Russia are likely to be cut “at any moment”. He also claims that the gas supply problem can only be solved with “unity and solidarity”.

Citing a source close to Russian officials, the Bloomberg agency said, declarationHe said Moscow would keep gas supplies to Europe to a minimum until the EU lifts sanctions.

Against the backdrop of reduced gas supplies to Moscow reached Former German Chancellor Gerhard Schroeder. It was reported that he arrived in the capital in connection with the holiday, but later it became known that he plans to negotiate with the Russian side on the supply of energy resources.

Later Kremlin spokesman Dmitry Peskov declarationHe is aware of Schroeder’s visit to the capital, but the former Chancellor’s talks with Russian President Vladimir Putin are not on the agenda. However, he did not exclude the possibility of meeting with one of the Russian representatives.