* Ukraine redeems $500 mln Eurobond
* Ukraine PM says $600 mln gas bill also paid
* Naftogaz still a worry, say analysts (Combines stories, adds details, quote, analyst)
By Sabina Zawadzki
KIEV, Aug 5 (Reuters) - Ukraine redeemed its 5-year $500 million Eurobond due this month, the finance ministry said on Wednesday, giving the crisis-hit ex-Soviet state a breathing space in sovereign debt repayments until the end of next year.
But investors and analysts remained concerned about state energy firm Naftogaz, even after July's Russian gas bill was paid, and in particular the government's as yet unclear plan to restructure the company's $500 million Eurobond due next month.
The finance ministry said in a statement it had paid out a total of $513 million to investors in the Eurobond which had a rate of LIBOR +3.375.
It said last month it was also redeeming a 768 million Swiss franc ($723 million) Eurobond, nine years before its redemption date after bondholders exercised an option to have it paid back early. [ID:nLR198757]
This means the state has no foreign currency debts to pay back until Dec. 19, 2010 when its 35.1 billion yen ($370 million) 4-year Eurobond matures.
"We are now in a situation of cutting down Ukraine's external debts and we will continue to systematically reduce debts as Ukraine comes out of the crisis," Prime Minister Yulia Tymoshenko told a news conference. Ukraine's ability to pay back its foreign currency debt has been in doubt since the currency lost half of its value in the last four months of 2008, gas prices rose at the start of this year and state finances became stretched due to low revenues.
CREDITWORTHINESS
Naftogaz has so far paid its gas bills on time since a January row with Russia led to a three-week stand off and gas cut-offs to millions in Europe.
The finance ministry appeared to have made little progress in helping to restructure Naftogaz's Eurobond -- acting Finance Minister Ihor Umansky said on Wednesday he would speed up efforts ahead of the September payout.
But analysts ask why, when Kiev has just received a $3.3 billion tranche from the International Monetary Fund, the government would want to risk its creditworthiness by restructuring when it is likely to afford to pay the debt back.
"The danger here is that all the good work they have done on the sovereign level to maintain their creditworthiness would be blown away by acting in an aggressive way (on the Naftogaz bond)," said Tim Ash, head of CEEMEA research at RBS.
Naftogaz is Ukraine's largest company and the largest single contributor of tax revenues to the budget and restructuring its quasi-sovereign debt could have devastating impact on the ability of Ukraine and Ukrainian companies to borrow abroad.
It has been struggling for years as Russia has raised gas prices steeply while it has been forced to sell gas domestically to largely unchanged, and often lower, prices.
As part of the IMF and a new EU deal to receive $1.7 billion of funds, the government has promised to raise household gas prices by 20 percent as of September and in future quarters.
Ratings agency Standard and Poor's, however, said the IMF's willingness to disburse funds to Ukraine and the EU Commission-brokered deal showed there was support for Ukraine and revised its outlook to "positive" from negative".
That vote of confidence, as well as figures showing that the steel sector -- key to Ukraine's economy -- is in better shape in recent months thanks to global demand, prompted Tymoshenko to say she expected agencies to raise their ratings.
"I think all global rating agencies will soon raise the ratings of Ukraine," she told a government meeting. (Additional reporting by Yuri Kulikov; Editing by Richard Balmforth)