Naftogaz bond issue creates concern

KIEV, Ukraine, Sept. 22 (UPI) -- Ukraine aims to secure support for state energy utility Naftogaz from its creditors with its plans to roll over roughly $1.7 billion in debt.

Naftogaz announced last week it would conduct negotiations with bilateral creditors to restructure its borrowings, which includes Eurobonds set to mature Sept. 30.

"Naftogaz is aware of the impending maturity of the Eurobonds and remains focused on providing a clear and robust proposition to bondholders as soon as practicable," the company said.

The cash-strapped utility faces mounting pressure to win support from its bondholders, including Russian moguls who threatened to block the restructuring effort.

A default for Naftogaz would be the first such collapse in Eastern Europe, The Financial Times reports. Such a development would send jitters through the European energy sector as it prepares for the winter heating season.

A January gas row between Kiev and Moscow over gas debts prompted Russian gas giant Gazprom to cut gas supplies to Ukraine for weeks. That left European customers in the cold as Naftogaz oversees the majority of Russian gas exports to Europe.

Gazprom chief Alexei Miller told a delegation of foreign academics in Moscow recently, however, that Ukraine appeared able to handle its gas obligations through the winter heating season.