Ukraine’s state-owned energy company, Naftogaz, defaulted on its foreign bonds on Tuesday after the government issued a decree last week saying the company should ask its permission to go ahead with making such payments.
The bond grace period has expired on Tuesday meaning the default is now inevitable.
In a Tuesday statement on its official website, Naftogaz said it approached the government seeking the green light for making transactions on the bonds long before the time they matured.
It also informed the government about the ‘possible negative consequences’ in the event of a hard default, arguing the company has the ‘necessary funds in its accounts to cover Eurobond payments’.
‘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,’ added the company that was in race
Triggering non-payment on Naftogaz Eurobond payments makes the government ‘responsible’ for raising funds to buy gas for the coming winter, said the energy company, adding that the default will also throw a wrench in Naftogaz attempts to access international capital markets.