The deadline for payments to holders of Naftogaz Eurobonds expired on 26 July without payment taking place, the national fuel company has said.
Acting in the temporary capacity of a Naftogaz General Meeting, the Ukrainian Cabinet of Ministers had earlier on 21 July issued order No. 625-r obliging Naftogaz officials to seek Cabinet approval before executing any transactions related to the company’s Eurobonds.
In line with this government decision and in order to meet its obligations regarding Eurobond payments, Naftogaz management applied to the Cabinet of Ministers for approval to carry out the relevant transaction.
In its official letter to the government, Naftogaz indicated the availability of the necessary funds in its accounts to cover Eurobond payments. Naftogaz officials also detailed the possible negative consequences for the company and for the country in the event of a hard default on Eurobond payments.
In response, the Cabinet of Ministers failed to provide permission for Naftogaz to fulfill its payment obligations to Eurobond holders for either the 2022 issue or the 2024 issue. The government has therefore defaulted on Naftogaz Eurobond payments.
As this failure to meet its Eurobond obligations effectively deprives Naftogaz of access to international capital markets, the Cabinet of Ministers as the responsible party now assumes full responsibility for raising the funds necessary for the import of natural gas for the 2022-23 heating season.