Naftogaz's proposed two-year freeze on Eurobond payments met predicted failure on Tuesday and the state-owned company has slipped into default as the clock ran out on making principal and coupon payments due on July 19.
Naftogaz said the proposals for the US$335m 2022s were rejected, while the meetings for the €600m July 2024s and US$500m 2026s were not quorate. On the same day, the five-day grace period for the 2022s and 2024s expired.
"It is acknowledged that certain events of default (as defined in the relevant trust deeds) have or will occur as a result of the resolution and the resulting failure to pay," said the company in a stock exchange filing.
Naftogaz is looking to launch a new consent solicitation, as prescribed by the Cabinet of Ministers of Ukraine. The company's original proposal had been seen as less investor-friendly than the similar two-year debt freeze subsequently requested by the sovereign, given the latter solicitation included accrued interest payments and a consent fee on the GDP warrants proposal.
The sovereign had also received support from a variety of key stakeholders for its consent, while a group of Naftogaz bondholders, advised by law firm Dechert, had already said that it would reject the company's offer.
With Naftogaz expected to launch a reconfigured consent solicitation imminently, it will be joined by two other state-owned companies, public road agency Ukravtodor and utility Ukrenergo.
Ukraine's government offered holders of over US$1.5bn of bonds in Ukravtodor and Ukrenergo a proposal to defer interest payments for two years, Ukraine's prime minister said on Tuesday, Reuters reported.
"Today, the government adopted documents offering the owners of Ukravtodor bonds worth US$700m to postpone interest payments on them until the end of 2024," Denys Shmyhal wrote on Telegram.
"The owners of Ukrenergo securities in the amount of US$825m were also offered to postpone payments for two years," the prime minister said.
"We expect that creditors will support Ukraine's appeal. In today's unprecedented challenges, this policy will apply to all of our commitments," he said.
Ukravtodor's and Ukrenergo's bonds are sovereign guaranteed, whereas Naftogaz's are not.