Page 51 - UKRRptAug23

Local-Currency (LTLC) at CCC. The Viability Rating (VR) has been affirmed at CCC-. The IDRs do not carry an Outlook at this level. The Government Support Rating (GSR) has been downgraded to No Support from CCC-. A full list of rating actions is below. The downgrade of the GSR reflects Fitch's belief that in the event of a material capital shortfall, PrivatBank would likely operate under regulatory capital forbearance in the near term rather than receive prompt extraordinary capital support from the sovereign. Key rating drivers:
● High Risk of Default: PrivatBank's LTFC IDR reflects Fitch's view that a default on its senior FC obligations remains a real possibility due to the war.
● No External Debt Obligations: While FC repayments remain subject to considerable uncertainty in the sector, PrivatBank's non-equity funding consists almost fully of customer deposits.
● Lower LC Default Risk: PrivatBank's CCC LTLC IDR, one notch above its LTFC IDR, reflects limited regulatory restrictions and constraints on LC operations.
8.5 Fixed income
8.5.1 Fixed income - bond news
Naftogaz completes its restructuring of defaulted bonds. The company officially offered bondholders the possibility to restructure their bonds maturing in July 2022 and November 2026, on which the company defaulted last year. The issuer of the securities, Kondor Finance, published a consent request on the Euronext Dublin exchange on July 13. This is the final procedure needed to complete the restructuring. To the owners of $335M in Eurobonds-2022, the company offered to pay 5% of the principal amount of the debt, overdue interest, last year's overdue payment, and additional interest by the end of July. Naftogaz must pay 50% of the remaining principal amount in July 2024 and another 50% in July 2025. Interest due in January 2024 will be deferred until July 2024 with the possibility of capitalization, and the rate on Eurobonds 2022 will increase to 7.65%. The company offered to pay 0.5% of the principal debt to the owners of Eurobonds for the $500M due in 2026. Naftogaz will repay the securities in equal parts in November 2027 and November 2028. Interest payments will resume in 2024.
Ukraine's Eurobonds value reached its maximum since the beginning of the war. The value of the Eurobonds of Ukraine jumped by an average of 13% last week and reached the maximum values since the beginning of the full-scale war. According to Western analysts, the quotations of dollar-denominated Eurobonds of Ukraine ended the previous week in a range from 28.1% of face value for short securities due in September 2025 to 25% of face value for "longest" securities with maturity in March 2035. On average, quotations of Ukrainian securities increased by 3.1% last week. In addition, Ukraine's GDP warrants rose to a new maximum since the beginning of the war to 42.6% of their nominal value, while a week ago, they had 39.3% of their nominal value. Market participants believe that last week's growth can be determined by financial markets' positive reaction to the results of the NATO summit, and a few weeks ago, the results of the Conference on the
51 UKRAINE Country Report August 2023 www.intellinews.com