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Viktor Yanukovych. The highest the country has scored was B1 (positive) in August 2008 as the entire region boomed before the global financial crisis struck that autumn.
Fitch Ratings reported on Sept. 13 that it has upgraded issuer default rating of Naftogaz (NAFTO) to B (from B-) with a Positive outlook. The upgrade mirrors the same rating improvement for the Ukrainian government a week before, the agency pointed out. "Fitch equalises Naftogaz's ratings with those of sovereign, reflecting the company's strong links with the sovereign and our assessment of the company's standalone credit profile at 'b-'," its press release said. Due to this close link, Fitch said it will be ready to further upgrade Naftogaz’s rating in line with future sovereign upgrades, even if Naftogaz’s standalone credit profile would be up to three notches weaker.
Fitch Ratings has upgraded the credit rating of Ukrzaliznytsia (UZ) from B- to B, the same upgrade Fitch gave the sovereign last Friday. Fitch cited the state railroad’s growth in freight traffic and hikes in freight rates, saying the company's revenue could top $4bn next year. New York-based Fitch predicts the railroad’s debt-to-EBITDA ratio will drop next year to 1:1, from 4:1 in 2014. In the last two months, the railroad has placed $600mn worth of 5-year Eurobonds, with annual yields ranging from 8.25% in July to 7.29% this week. UZ CEO Evhen Kravtsov, says: “We give a positive signal to investors, especially in the context of the possibility of attracting additional financing for the modernization and development of the railway.”
Fitch Ratings upgraded the long-term issuer default rating of Ukrainian sunflower oil producer and grain trader Kernel to BB- from B+ with a Stable outlook, the agency reported on September 30. The rating upgrade was based on expectations of a high share of export profits and improving macroeconomic stability in Ukraine, the agency said. In its press release on the rating action, Fitch also wrote about Kernel’s plans to issue $300-350mn in new Eurobonds with 5-7 years maturity. The agency assigned a BB- (expected) rating for Kernel’s new issue. Fitch expects that part of new bond issue will be used to repay a portion of its $185mn in short-term borrowings. “Kernel’s rating update is a positive surprise to us, taking into account that in October 2018, Fitch stated that such an upgrade in the next three years is unlikely. We see the company’s strong FY2019 results( EBITDA surged 55% y/y, net debt to EBITDA ratio dropped to 2.05x from 2.80x a year before) made the rating move possible,” Andriy Perederey of Concorde Capital said in a note. “After the upgrade, Kernel’s rating remains two notches higher than sovereign. The company’s planned Eurobond issue will support its liquidity and facilitate its CapEx needs in FY2020 (about $300mn).”
8.5 Fixed income
Ukraine’s Finance Ministry only raised UAH77.2mn ($3.1mn) from the sale of 3M, 1Y and 2Y bonds at its weekly bond auction on October 1 – an almost negligent amount compared to the UAH13bn ($23mn) raised at the auction a week earlier.
Around half of auction receipts – UAH42.7mn – came from the sale of 2Y bonds to seven out of eight bidders at a weighted average interest rate of 15.36%. In addition, six out of seven bidders were successful in buying 3M bonds at 15.75%. The rest of the auction’s receipts – UAH15.3mn – from the sale of 1Y bonds to a sole bidder at 15.09%.
Ukrainian president Volodymyr Zelenskiy has had a tough week as the
honeymoon with investors abruptly came to an end in the middle of September
as the house of former NBU governor Valeriya Gontareva was burnt down in
53 UKRAINE Country Report October 2019 www.intellinews.com
