Naftogaz reportedly puts off new bond placement

Naftogaz of Ukraine
(NAFTO) decided on Oct. 19 to postpone indefinitely the placement of a new
Eurobond maturing in February 2027, Interfax-Ukraine reported the next day, citing its sources on the
market. Earlier on Oct. 19, Interfax reported the expected yield on the new Eurobond is
in the range of 9.00%-9.25%. Later on, Bloomberg reported the final yield is
8.95%, far above the coupon rate on the notes that Naftogaz was going to
refinance (7.375% and 7.125%).

Recall, Naftogaz announced an offer on
Oct. 14 to
tender its 2022 and 2024 bonds for a maximum amount of USD 335 mln, whose
purchase was conditional on the successful placement of new notes.

Alexander
Paraschiy: The high
borrowing rate on
Naftogaz new bond is not a surprise to us, given that the placement’s timing
was far from ideal. The alleged postponement of the issue looks logical from
financial and political standpoints. Thus far, there is a chance that next
spring, the conditions for placement could be more favorable, even though the
company’s rush to place the bonds this autumn suggests Naftogaz is (or
was some time before) not
sure whether another favorable opportunity will emerge. All in all, we see the
news as negative for the company’s mid-term liquidity outlook.