RPT-Fitch Downgrades Ukrainian Corporates on Sovereign Action

Wed Feb 12, 2014 8:04am EST

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Feb 12 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has downgraded 12 Ukrainian companies' ratings, following the agency's rating action on the Ukrainian sovereign (see 'Fitch Downgrades Ukraine to CCC'; dated 7 February 2014 on www.fitchratings.com).

The agency downgraded Ukraine's Long term foreign currency Issuer Default Rating (IDR) to 'CCC' from 'B-' and affirmed the local currency IDR at 'B-' Outlook Negative and the Short-term foreign currency IDR to 'C' from 'B'. Ukraine's Country Ceiling was downgraded to 'CCC' from 'B-'.

The corporate rating actions reflect the increased uncertainty regarding the political and economic situation in the Ukraine which may ultimately threaten companies' ability to meet both their foreign and local currency obligations.

In line with Fitch's criteria 'Rating Non-Financial Corporates above the Country Ceiling', the Long-Term foreign currency IDRs of the companies listed below, if they were previously higher, have been downgraded to 'CCC' in line with the Ukrainian Country Ceiling. Due to the imposition of limited capital controls and the recent depreciation of the hryvna, we see the immediate threat to companies' foreign currency borrowings as higher than that to their local currency debt.

However, we believe the likelihood of default on local currency obligations has also increased. This reflects the higher level of political and economic uncertainty, plus cross-default provisions between local and foreign currency debt which, where present, are a particular concern at this rating level.

Therefore, if they were previously higher, the companies' Long-Term local currency IDRs and senior unsecured debt ratings have been downgraded to one notch above their foreign currency equivalents, to 'B-'.

Fitch expects to publish a further rating action commentary in the near future summarising non-financial corporate Ukrainian National Scale ratings.

The rating actions are as follows:

Avangardco Investmente Public Limited

Long-term foreign currency IDR downgraded to 'CCC'; from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-';

Recovery Rating of 'RR4'

Please see 'Fitch Upgrades Avangardco's Local Currency IDR to 'B+'; Affirms Foreign Currency IDR at 'B'' dated 22 May 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

DTEK Holdings B.V.

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Short-term foreign currency IDR is downgraded to 'C' from 'B'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative

Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-'; Recovery Rating of 'RR4'

Short-term local currency IDR: affirmed at 'B'

DTEK Finance BV's senior unsecured notes and DTEK Finance plc's senior unsecured guaranteed notes downgraded to 'CCC' from 'B-'; Recovery Rating of 'RR4' Please see 'Fitch Affirms DTEK at 'B', Stable Outlook', dated 25 March 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Ferrexpo Plc

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Short-term foreign currency IDR: downgraded to 'C' from 'B'

Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-'; Recovery Rating of 'RR4'

Ferrexpo Finance plc's guaranteed notes' senior unsecured rating: downgraded to 'CCC' from 'B-'; Recovery Rating of 'RR4'

Please see 'Fitch Affirms Ferrexpo plc at 'B'; Outlook Negative' dated 3 October 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Fintest Trading Co. Limited

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating is constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative

Please see 'Fitch Affirms Ukraine's Fintest Trading Co. at 'B'; Outlook Negative' dated 10 October 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Kernel Holding SA

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative Please see 'Fitch Affirms Kernel at 'B'' dated 5 March 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Lemtrans LLC

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating is constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-',

Recovery Rating of 'RR4'

Please see 'Fitch Assigns Ukraine's Lemtrans 'B' Rating; Outlook Stable', dated 30 April 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Metinvest B.V.

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Short-term foreign currency IDR: downgraded to 'C' from 'B'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative

Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-';

Recovery Rating of 'RR4'

Short-term local currency IDR: affirmed at 'B' Please see 'Fitch Affirms METINVEST at 'B'; Outlook Stable' dated 20 June 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

MHP S.A.

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative

Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-'; Recovery Rating of 'RR4'

Please see 'Fitch Rates MHP's Unsecured Bond at 'B'/'RR4'' dated 2 April 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities. OJSC Myronivsky Hliboproduct (MHP S.A.'s 99.9% owned subsidiary)

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative Please see 'Fitch Rates MHP's Unsecured Bond at 'B'/'RR4'' dated 2 April 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Mriya Agro Holding Public Limited

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating is constrained by Ukraine's Country Ceiling of 'CCC'

Short-term foreign currency IDR: downgraded to 'C' from 'B'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative

Short-term local currency IDR: affirmed at 'B'

Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-'; Recovery Rating of 'RR4'

Please see 'Fitch Rates Mriya's Unsecured Bond Issue at 'B/RR4' dated 19 April 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

NJSC Naftogaz of Ukraine (Naftogaz)

Long-term foreign currency IDR: affirmed at 'CCC'

Long-term local currency IDR: affirmed at 'CCC'

Senior unsecured foreign currency rating in respect of USD1,595m bond guaranteed by Ukraine downgraded to 'CCC' from 'B-'; Recovery Rating of 'RR4' Please see 'Fitch Affirms Naftogaz at 'CCC', Guaranteed Notes at 'B' dated 18 December 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

OJSC Creative Group Public Limited

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating is constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: affirmed at 'B-'; Outlook revised to Negative Please see 'Fitch Rates Creative 'B-'; Outlook Positive; Rates Bond 'B-(EXP)'/RWN' dated 15 April 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Ukrlandfarming PLC

Long-term foreign currency IDR: downgraded to 'CCC' from 'B-'. The rating remains constrained by Ukraine's Country Ceiling of 'CCC'

Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Negative Foreign currency senior unsecured rating: downgraded to 'CCC' from 'B-';

Recovery Rating of 'RR4' Please see 'Fitch Rates UkrLandFarming's Unsecured Bond at 'B'/'RR4'' dated 26 March 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

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