Negative outlook for the national long-term rating
Fitch, a global rating agency, has revised the Kyiv long-term rating in foreign and national currencies changing it from ССС to СС, and the national long-term rating from BBB (ukr) to BB (ukr), the Fitch’s press-office reports.
The outlook for the national long-term rating is negative.
The agency has also affirmed the Kyiv short-term foreign currency rating at C level.
Besides, Fitch has downgraded the rating of Kyiv Eurobonds, $550 million, from ССС to СС, and domestic bonds, 4.5 billion hryvnias, from BBB (ukr) to BB(ukr).
Fitch explains it has lowered the ratings because Kyiv has not paid off the tranche of domestic bonds amounting to 1.125 billion hryvnias as of October 6, 2014, as planned. Instead of this, the Kyiv city council announced it was going to restructure the domestic debt virtually not paid off so far. That is why Fitch considers these bonds to be troubled debt evidencing of rather high level of credit risk with high probability of default.
In its decision passed on September 18, 2014, the Kyiv city council voted for postponing the repayment of domestic arrears amounting to 2.625 billion hryvnias for 360 days.
If Kyiv does not pay off the outstanding debt until the end of the grace period, until October 9, 2014, Fitch will consider it to be troubled debt and can change the Kyiv long-term national currency rating up to RD (restricted default), the ratings of bonds - up to D.
