Fitch downgrades Ukrainian Railways to C due to proposal to defer bond payments

MOSCOW. Dec 13 (Interfax) - Fitch Ratings has downgraded the long-term foreign currency issuer default rating of Ukrainian Railways (UR) to "C" from "CC" due to the company's proposal to holders of its dollar-denominated Eurobonds (LPN) maturing in 2024 and 2026 to defer all payments on them for 24 months.

Fitch also downgraded UR' long-term local currency issuer default rating to "C" from "CCC-" and its standalone credit profile to "c" from "ccc."

This refers to an issue of Eurobonds totaling $594.9 million that matures in July 2024 and one totaling $300 million that matures in July 2026, which together make up almost 80% of the company's debt.

Fitch also said that UR' liquidity position is currently limited and insufficient to cover interest payments on dollar-denominated LPN due in January 2023 in the absence of further support from the Ukrainian government, which cannot give the company the money it needs for the payments.

If the request to defer payments on the Eurobonds is granted, the company will be able to use current financing mechanisms in the amount of 199 million euros to continue full-fledged operations, Fitch said. Another 200 million euros "may follow after European Bank of Reconstruction and Development's (EBRD) additional procedures and subject to EBRD's review of UR's operational and financial performance and needs," the agency said.

S&P Global Ratings earlier downgraded UR's rating to "CC" from "CCC-", also because of the proposal to defer payments on the Eurobonds.