Fitch affirms rating of Ukraine's Naftogaz at 'CC'

MOSCOW. Dec 11 (Interfax) - Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of Naftogaz of Ukraine at 'CC', Ukrainian media reported, citing a statement on the Fitch Ratings website.

"We rate Naftogaz on a standalone basis given its [Standalone Credit Profile] SCP and our assessment of moderate linkage with its sole shareholder, the state, in line with our Government-Related Entities Rating Criteria (GRE criteria). Ukraine is rated 'RD' (Restricted Default)," the statement said. Fitch recently affirmed Ukraine's Long-Term Foreign-Currency Issuer Default Rating at 'Restricted Default' against the backdrop of negotiations on restructuring its GDP-linked warrants.

Fitch also affirmed the senior unsecured notes issued by Naftogaz subsidiary Kondor Finance plc at 'C'. The Recovery Rating is 'RR6', as the company continues to make full and timely payments on its Eurobonds restructured in 2023.

According to Fitch, Naftogaz's continuing gas production despite damage to gas infrastructure in 2025 was among the key factors behind the decision on the company's rating.

Naftogaz's IDR reflects the company's projected weak liquidity, due to very high operational risks in Ukraine resulting from the crisis, increasing need to purchase natural gas externally, and limited external funding options, it said.

Naftogaz plans to increase the share of natural gas purchased on the market from 11% in 2024 to 33% in 2025, expecting that both operating metrics as well as the financial profile are going to be weaker in 2025 than in 2024, it said.

Naftogaz has made timely payment on its debt obligations so far in 2025 despite the operational and financial challenges, Fitch said. However, Naftogaz faces a large principal payment 689 million euros in July 2026, Fitch said, adding that another restructuring process might be possible.