Ukraine's grid operator, NPC Ukrenergo, says it is close to wrapping up a restructuring that could free up cash to restore its war-damaged network. The company has a DFC guarantee that it expects will cut borrowing costs compared with going it alone, and it aims to use the proceeds to take out defaulted debt. Exiting default would also make it easier to tap fresh capital for reconstruction, according to a company spokesperson.
Citigroup is arranging an issuance of new DFC-backed bonds totaling no less than $445 million for placement with market investors. Representatives for the DFC and for Citigroup said they would not provide comment on either the financing or the restructuring.
Ukrenergo plans to raise new money to repurchase notes that have been in default for almost two years. The offer to holders of its $825 million Eurobond maturing in 2028 has two options: accept cash at 60% to 65.125% of face amount, or exchange into new paper on a one-for-one basis carrying an 8.5% coupon.
The buyback is capped at $445 million and depends on completing the DFC-supported issuance. The replacement bonds will not carry a DFC guarantee and would be paid down in eight equal installments beginning in June 2028. Shortly after settlement, the new notes will make an interest payment covering accruals from July 2025. Moving forward requires bondholder consent at a virtual meeting on Oct. 1.
Understanding what moved a market beats knowing that it moved. Get the free Market Briefs daily newsletter and follow the drivers.
The company has struggled with its liabilities since Russia's full-scale invasion in 2022. In 2022, the company started to postpone payments, and later, in late 2024, it halted interest on the Eurobond. A prior restructuring attempt stalled in July 2025 after conditions to secure required financing were not met, a delay the spokesperson described as reflecting a "complex financing structure."
Ukrenergo relies extensively on development finance institutions to finance the rebuilding and upkeep of infrastructure that has suffered escalating attacks this year, and staying in default has complicated efforts to raise fresh funds.
The DFC - a US government investment vehicle launched during Donald Trump's first term to advance foreign policy goals - has been active in Ukraine. Among its initiatives is seed capital for the US-Ukraine Reconstruction Investment Fund, which was set up as an element of a mineral resources agreement between the two nations.
If bondholders approve and the DFC-backed sale lands, Ukrenergo aims to cure its default and reopen access to reconstruction funding. For creditors, the decision is straightforward: lock in a defined cash recovery between 60% and 65.125%, or roll into new 8.5% notes that start paying down in eight steps from June 2028.
