Fitch Downgrades 3 Ukrainian Subnationals to 'CCC'

Fri Aug 29, 2014 12:10pm EDT

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Ukranian Subnationals - Rating Action Report here MOSCOW, August 29 (Fitch) Fitch Ratings has downgraded the City of Kyiv's, the City of Kharkov's and Odessa Region's Long-term local currency Issuer Default Ratings (IDRs) to 'CCC' from 'B-'. The agency has also affirmed their Long-term foreign currency IDRs at 'CCC' and Short-term foreign currency IDRs at 'C'. The National Long-term ratings were affirmed at 'BBB(ukr)' for City of Kyiv, at 'A+(ukr)' for City of Kharkov and 'AA-(ukr)' for Odessa Region. The Outlook is Negative. Kyiv's outstanding senior unsecured domestic bonds totalling UAH5.4bn have been downgraded to 'CCC' from 'B-' while its senior eurobonds totalling USD550m have been affirmed at 'CCC'. The Long-term local currency rating of Kharkov's outstanding UAH99.5m senior unsecured bonds has also been downgraded to 'CCC' from 'B-'. Under EU credit rating agency (CRA) regulation, the publication of International Public Finance reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that we believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status. The next scheduled review date for Fitch's rating on the City of Kyiv was 10 October 2014 and for the City of Kharkov and Odessa Region 14 November 2014. However, following the downgrade of Ukraine's Long-term local currency IDR on 22 August 2014 (see 'Fitch Downgrades Ukraine's LC IDR to 'CCC'; Affirms FC IDR at 'CCC' dated 22 August 2014 at www.fitchratings.com) we have taken a similar rating action on these issuers as they are rated at the same level as the sovereign. KEY RATING DRIVERS The City of Kyiv's, the City of Kharkov's and Odessa Region's ratings are equalised with the sovereign, in line with Fitch's criteria of 'International Local and Regional Governments Rating Criteria outside United States'. Under our criteria, a local or regional government can only be rated above the sovereign in exceptional circumstances. The rating factors for National ratings are unaffected, leading to today's affirmation. RATING SENSITIVITIES Any rating change to Ukraine would lead to similar changes to the Ukrainian subnationals' ratings. The rating actions are as follows: City of Kyiv Long-term local currency IDR downgraded to 'CCC' from 'B-' Long-term foreign currency IDR affirmed at 'CCC' Short-term foreign currency IDR affirmed at 'C' National Long-term rating affirmed at 'BBB(ukr)'; Outlook Negative Senior unsecured notes' long-term foreign currency rating affirmed at 'CCC' Senior unsecured notes' long-term local currency rating downgraded to 'CCC' from 'B-' Senior unsecured notes' National long-term rating affirmed at 'BBB(ukr)' City of Kharkov Long-term local currency IDR downgraded to 'CCC' from 'B-' Long-term foreign currency IDR affirmed at 'CCC' Short-term foreign currency IDR affirmed at 'C' National Long-term rating affirmed at 'A+(ukr)'; Outlook Negative Senior unsecured notes' long-term local currency rating downgraded to 'CCC' from 'B-' Senior unsecured notes' long-term rating affirmed at 'A+(ukr)' Odessa Region Long-term local currency IDR downgraded to 'CCC' from 'B-' Long-term foreign currency IDR affirmed at 'CCC' Short-term foreign currency IDR affirmed at 'C' National Long-term rating affirmed at 'AA-(ukr)'; Outlook Negative Contact: Primary Analysts Konstantin Anglichanov (City of Kyiv) Director +7 495 956 99 94 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Elena Ozhegova (City of Kharkov) Associate Director +7 495 956 99 87 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Victoria Semerkhanova (Odessa Region) Associate Director +7 495 956 99 65 Fitch Ratings CIS Ltd 26 Valovaya Street Moscow 115054 Secondary Analysts Elena Ozhegova (City of Kyiv) Associate Director +7 495 956 99 87 Konstantin Anglichanov (City of Kharkov, Odessa Region) Director +7 495 956 99 94 Committee Chairperson Guilhem Costes Senior Director +34 93 323 8410 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria 'Tax-Supported Rating Criteria' dated 14 August 2012, 'International Local and Regional Governments Rating Criteria outside United States' dated 23 April 2014 are available at www.fitchratings.com. Applicable Criteria and Related Research: Tax-Supported Rating Criteria here International Local and Regional Governments Rating Criteria - Outside the United States here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. 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