NEW YORK--(BUSINESS WIRE)--Fitch Ratings has taken the following rating actions on Ukraine:
--Long-term foreign currency IDR downgraded to 'C' from 'CC';
--Long-term local currency IDR affirmed at 'CCC';
--Senior unsecured Foreign-Currency issue ratings downgraded to 'C' from 'CC';
--Senior unsecured Local-Currency issue ratings affirmed at 'CCC';
--Senior unsecured Foreign-Currency, domestically-issued issue ratings upgraded to 'CCC' from 'CC';
--Country Ceiling affirmed at 'CCC'.
KEY RATING DRIVERS
The government of Ukraine today announced that it had reached an agreement with a representative group of creditors for a debt exchange that would result in a 20% reduction in principal and a postponement of principal repayments on USD18 billion of government and government-guaranteed Eurobonds. Fitch considers that this represents a Distressed Debt Exchange (DDE) under its criteria that results in material losses to bondholders and is being conducted in order to avoid default.
Domestically-issued, foreign-currency bonds are not included in the debt restructuring and are upgraded to align their ratings with the long-term, local-currency IDR.
RATING SENSITIVITIES
The foreign and local currency IDRs do not have Outlooks.
Fitch does not envisage developments that would result in positive rating action at the present time.
Completion of the debt exchange will result in the foreign-currency IDR being downgraded to 'RD'.
Ukraine's ratings will be raised out of default shortly after Fitch determines that the exchange has been successful, which is typically measured by a minimum participation rate of 90%. The new rating will be consistent with Ukraine's prospective credit profile and debt structure.
KEY ASSUMPTIONS
Fitch assumes that the government's announcement of a debt restructuring with a representative group of creditors on 27 August will be implemented.
Additional information is available on www.fitchratings.com.
Applicable Criteria
Country Ceilings (pub. 20 Aug 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869287
Distressed Debt Exchange (pub. 12 Jun 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867091
Sovereign Rating Criteria (pub. 12 Aug 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754428
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=990020
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=990020
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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