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Bond Market News
DTEK Downgraded to SD; Ukraine Restarts Debt Restructuring Talks with Bondholders
July 19, 2024
Ukrainian Electricity producer DTEK Renewables was downgraded to SD from CCC- by S&P. The downgrade comes after the company announced that it had received consent from bondholders to amend the terms of the trust deed related to its €325mn 8.5% 2024s, issued by its subsidiary DTEK Renewables Finance B.V. The proposed amendments included a maturity extension by three years to 12 November 2027. It also introduced an option for the issuer to pay interest in cash or PIK (Term of the Day, explained below) on not more than two occasions. S&P views it as a distressed debt exchange since the bondholders will receive less than par value.
Separately, Ukraine’s government has restarted talks with creditors on restructuring more than $20bn in debt. This comes after the freeze on payments agreed to between creditors and Ukraine two years ago is set to expire on 1 August 2024. Ukraine could then enter a technical default if it does not pay-up after a 10-day grace period. A group of Ukraine’s bondholders have signed NDAs with the second round of talks commencing this week. As per sources, the first round of negotiations failed. The two sides are closing the gap on haircuts and coupon payments, with bondholders pushing for more than symbolic coupon payments after the moratorium ends, the sources added.
Ukraine’s 7.375% 2034s continue to trade at distressed levels of 27.8 cents on the dollar.
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