Ukrainian government tells Naftogaz to held new talks on debt restructuring

BY Reuters | CORPORATE | 07/26/22 11:05 AM EDT

KYIV, July 26 (Reuters) - Ukraine's government has ordered state-owned energy company Naftogaz to begin a second round of talks with its bondholders on restructuring the company's debt, a government source said on Tuesday.

Naftogaz is close to default because a deadline for payments on its international bonds is due to pass later on Tuesday. Bondholders have rejected an offer to defer for two years the redemption of 2022 Eurobond and interest payments due on July 19. (Reporting by Natalia Zinets, Editing by Timothy Heritage)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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