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Concorde Capital Research: Naftogaz officially postpones issue of Eurobond

November 16, 2018 | Cbonds

Naftogaz of Ukraine (NAFTO) reported on Nov. 15 it has postponed indefinitely its Eurobond issue “because of volatile market conditions and elevated funding levels.” Commenting on the decision, the company’s CEO Andriy Kobolev said that it’s “not reasonable” for Naftogaz to borrow at the current levels. “We are grateful for the high investor interest and look forward to returning to the market in the future,” he said. The company was planning to issue 5-year Eurobonds for USD 0.5 – 1.0 bln. Earlier, media reported that the initial pricing of the bonds was at the 10.9% level, indicating its total subscription book of about USD 700 mln.

Alexander Paraschiy: Demand for Ukraine-level-rated bonds appears to be too low these days, which might be a consequence of Ukraine’s failure to close the deal with the IMF, increased rates for EM dollar debt, as well as possible political risks associated with investment in Naftogaz. On top of that, it looks like Ukraine’s recent placement of USD 750 mln in 5-year bonds diverted demand for the quasi-sovereign issuer.

Naftogaz’ postponement means that Ukraine’s sovereign universe (including state banks, MinFin and the NBU) lost an opportunity to receive an external injection of hard currency in the amount of at least USD 0.5 bln. That’s not supportive for Ukraine’s sovereign curve and for the short-term support of Ukraine’s currency.

Company: Naftogaz

Full company namePJSC "Naftogaz of Ukraine"
Country of riskUkraine
Country of registrationUkraine
IndustryOil and gas

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