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Fitch slices DTEK Oil & Gas
Fitch Ratings said it downgraded DTEK Oil & Gas Production BV's long-term issuer default rating to CC from CCC. The agency also lowered the senior unsecured rating on the notes issued by NGD Holdings BV to CC from CCC. The recovery rating is RR4.
“The downgrade reflects DTEK Oil & Gas's material drop in gas sales, leading to reduced and volatile cash flows, a weaker liquidity profile and the potential impact of the National Bank of Ukraine's (NBU) moratorium on cross-border foreign-currency payments on the company's ability to pay its U.S. dollar coupon on June 30,” the agency said in a press release.
However, Fitch noted the bank will allow exceptions, but it is unclear whether DTEK will get one.
At the end of the first quarter, DTEK had about $43 million in cash, enough to cover the $14.3 million coupon payments in June and December.
“However, volatile cash flows create uncertainty about the company's ability to maintain an adequate liquidity position in the next 12 months. All sales are currently in local currency, while the company's debt obligations are mostly in U.S. dollars. However, local gas prices are linked to European hubs and euro exchange rates,” Fitch said.
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