Page 64 - UKRRptSept22

8.4 International ratings
Ukraine’s credit score was lifted out of default by Fitch Ratings on August 18 as the Eastern European nation enacts its agreement with creditors to delay debt payments.
The war-torn country’s credit rating was upgraded to CC from RD -- or restricted default -- on Wednesday by Fitch. The move comes after bondholders agreed to defer about $6bn in sovereign principal and interest payments for two years amid war-related spending needs.
“Despite this debt servicing relief, the ‘CC’ rating reflects unresolved debt sustainability risks resulting from Russia’s attack and Ukraine’s highly stressed public and external finances and macro-financial position,” according to a Fitch statement. “A broader restructuring of the government’s commercial debt is therefore probable in our view, although the timing is uncertain.” Ukraine was downgraded to default scores by both S&P Global Ratings and Fitch on Aug. 12 after investors representing around 75% of $19.6bn worth of the country’s foreign bonds agreed to defer coupon and principal payments until 2024. An overwhelming majority of bondholders also approved a request to amend the terms of payments on so-called GDP warrants, which are linked to the country’s economic growth.
The upgrade Wednesday follows the execution of the debt deferral, which Fitch said “constitutes completion of a distressed debt exchange (DDE), curing the ‘restricted default.’” The country is still rated in selective default by S&P, while Moody’s Investors Service rates it at Caa3.
The S&P international rating agency has raised Ukraine's rating from Default. The rating company upgraded Ukraine to CCC+ from the selective default rating, SD, with a stable outlook citing a reduction in government debt service requirements and an expectation of steady international financial support. “S&P rating action reflects strong, committed international financial support for Ukraine, coupled with eroding, albeit still relatively high, foreign exchange reserves,” S&P analysts wrote. S&P added that the Ukraine government was able to restructure $22.6B in Eurobonds, as well as Eurobonds with a state guarantee worth about $1.5B, after obtaining bondholder consent to postpone interest payments for 24 months. The upgrade follows a similar action by Fitch Ratings, which took Ukraine out of default on Wednesday, as the Eastern European nation modifies its agreements with creditors to delay debt payments. Moody’s Investors Service rates it at Caa3, the third-lowest score.
Fitch confirms the ratings of Ukrainian state banks. The rating agency Fitch Ratings confirmed the long-term issuer default ratings of seven Ukrainian banks in foreign and national currency at the level of CCC- and CCC, respectively, the agency said. These banks are: Oschadbank, Ukreximbank, PrivatBank, Ukrgasbank, PUMB, Alfa-Bank Ukraine, and ProCredit Bank. At the same time, Fitch lowered the stability rating of PrivatBank to CCC- from CCC and six other banks to SS from ССС. Thus, the agency decided to show increased sovereign and operational environment risks for the creditworthiness of individual banks. Fitch adjusted the banks' ratings against the background of raising the country's sovereign rating to "CC" last week. Fitch noted that banks' foreign currency liquidity is "tight but generally adequate" compared to their needs.
Fitch upgrades the rating of Ukrainian Railways. The international rating agency Fitch Ratings has raised the long-term default rating of the foreign currency bond issuer Ukrainian Railways (UZ) from C to CC, announced the agency. The revision of the company's rating took place following the upgrade of the sovereign ratings of Ukraine on August 17, 2022, to CC. UZ is
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