Fitch Ratings has downgraded Naftogaz of Ukraine’s (Naftogaz) Long-Term Issuer Default Rating (IDR) to ‘C’ from ‘CCC’ following its consent solicitation to defer its debt servicing of its Eurobonds.
The relevant statement was made by Fitch Ratings, an Ukrinform Correspondent reports.
“Fitch Ratings has downgraded National Joint Stock Company Naftogaz of Ukraine’s (Naftogaz) Long-Term Issuer Default Rating (IDR) to ‘C’ from ‘CCC’ following its consent solicitation to defer its debt servicing of its Eurobonds, including that due on 19 July 2022,” the report states.
According to the agency, they view the solicitation as a Distressed Debt Exchange (DDE) under Fitch’s criteria, given the restructuring would involve a material reduction in terms and is conducted to avoid insolvency.
Fitch Ratings noted that Russia’s Invasion in Ukraine had affected Naftogaz’s performance and cast uncertainty over the agency’s financial projections for the company’s performance.
“Its liquidity position is very weak and, among other factors, is affected by the need to buy additional volumes of natural gas for the winter season in the market. Deferring interest and coupon payments should enable Naftogaz to buy more gas to better prepare for the winter season,” Fitch Ratings added.
A reminder that Naftogaz of Ukraine NJSC appealed to Eurobond holders with a proposal to postpone its coupon payments and the repayment of $350 million in debt with interest for a period of two years.