Naftogaz restructures some of its debt to Oschadbank

The Cabinet of Ministers approved on Sept. 23 an amendment to a loan agreement between State Oschadbank (OSCHAD) and state natural gas giant Naftogaz, according to its resolution made public on Oct. 6. The addendum, dated Sept. 30, 2014, is to a June 5, 2009 loan agreement, while no other details are provided regarding the nature of the changes in the loan deal.

Alexander Paraschiy: The outstanding amount of its debt to Oschadbank under the 05-Jun-09 loan agreement was UAH 3.2 bln as of end-2012 at an interest rate of 11%, according to Naftogaz’s 2012 annual report. This is one of the three outstanding loans provided by Oschadbank to Naftogaz at a total amount of UAH 20.1 bln (as of end-2012). The state energy holding kept this debt structure secret as of end-2013, but we can find some information about this debt in the latest available presentation of Oschadbank.

Based on the presentation, we have identified the total amount outstanding under this loan (05-Jun-09) was UAH 2.8 bln as of end-2013 (5% of the bank’s gross loan portfolio), while the interest rate under this debt decreased to 10% in 2013. While we do not know what exactly has been agreed to in the latest amendments to the loan agreement, most likely the state bank allowed some postponement of the debt’s repayment.

Naftogaz has to repay all its loans to Oschadbank, or UAH 15.2 bln, during 1Q14-1Q15, which might be too high a burden for the state gas monopoly. We do not see that a possible postponement will affect somehow the liquidity or solvency of Oschadbank, which can always get refinancing from the central bank by pledging Naftogaz’s obligations.