Naftogaz, Ukraine’s biggest company and operator of the transit pipeline carrying Russian gas to western Europe, has defaulted on a $500m Eurobond. That will not shut off the gas, but still has important implications: the state-owned company’s debt was viewed by investors as quasi-sovereign. It failed to repay the bond by the September 30 deadline, though it did – very late – make a restructuring offer.

Maturing bonds can be swapped for a new five-year issue with a higher coupon and a state guarantee. As a sweetener, Naftogaz paid the final $20m coupon on the existing bonds. A bondholder action group says it will accept the deal. If Naftogaz secures 75 per cent acceptance, all of its $1.7bn foreign debt, including the eurobond and bilateral loans, will be exchanged into the new instrument. That will help cash-strapped Naftogaz continue paying its gas bills to Russia.