Ukraine's national energy company, Naftogaz, has been issued its first tranche of letters of credit (L/Cs) as part of a US$500 million loan.

The loan, which is World Bank guaranteed, is an important one for Kiev because of its dispute with Moscow over supplies of Russian gas.

L/C release

According to chairman of Citibank Ukraine, Steven Fisher, the loan is active and the first four L/Cs were issued on 3 March 2016.

He did not disclose the value of the L/Cs.

Loan structure

Ukraine's energy utility signed with Citi and Deutsche Bank a loan agreement for a euro-denominated credit facility last year for gas purchases valued at US$500 million.

The facility is secured by a World Bank guarantee, which in turn is backed by a sovereign guarantee.

Ukraine's finance ministry and Naftogaz spent several months negotiating the guarantees which are particularly important for the country which has been in dispute with Russia - formerly its sole supplier of gas - and is currently importing all its gas from Europe.

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