Fitch applies criteria changes to Ukraine`s ratings

Tuesday, July 26, 2016 - 12:35 (EEST) Section: Latest news

Fitch Ratings has affirmed Ukraine`s Long-Term Local Currency (LTLC) IDR at `CCC,` Fitch Ratings said in its press release.
The issue ratings on Ukraine`s Long-Term senior unsecured Local Currency bonds have also been affirmed at `CCC`. The Short-Term Foreign Currency (STFC) IDR has been affirmed at `C` and a new Short-Term Local Currency (STLC) IDR of `C` has been assigned, according to the press release.
Under the European Union credit rating agency`s (CRA) regulation, the publication of sovereign reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this to comply with their legal obligations.
Fitch interprets this provision as allowing the country to publish a rating review in situations where there is a change in the criteria one believes makes it inappropriate to wait until the next scheduled review date to update the rating or Outlook/Watch status. The next scheduled review date for Fitch`s sovereign rating on Ukraine is November 11, 2016, but Fitch believes that a portfolio review is now warranted based on recent changes to the country`s criteria.
In line with the updated guidance contained in Fitch`s revised Sovereign Rating Criteria, dated July 18, 2016, Ukraine`s credit profile does not support a notching up of the LTLC IDR above the LTFC IDR. This reflects Fitch`s view that neither of the two key factors cited in the criteria that support upward notching of the LTLC IDR are present for Ukraine. Those two key factors are: (i) strong public finance fundamentals relative to external finance fundamentals; and (ii) previous preferential treatment of LC creditors relative to FC creditors, the report said.