: :inin Kyiv (EET)

Fitch withdraws Ukrzaliznytsia`s ratings, rates its legal successor, Ukrainian Railway

Fitch Ratings on March 22, 2016, withdrew the State Administration of Railways Transport of Ukraine`s (Ukrzaliznytsia) ratings including its Long-term foreign currency Issuer Default Rating (IDR) of `C` and Long-term local currency IDR of `RD` (Restricted Default).
This follows the reorganization of Ukrzaliznytsia into Public Joint Stock Company Ukrainian Railway (Ukrainian Railway), Fitch said in a statement.
Accordingly, Fitch said it would no longer provide ratings for Ukrzaliznytsia.
Simultaneously Fitch assigned Ukrainian Railway a Long-term foreign currency IDR of `C`, and a Long-term local currency IDR of `RD`.
Ukrainian Railway is a legal successor of Ukrzaliznytsia, the country`s six regional railway enterprises and other railway transport enterprises (collectively Ukrzaliznytsia Group), which were merged as a result of the reorganization as part of Ukraine`s railway transportation reform for 2010-2019. Following the reorganization Fitch has withdrawn the ratings of Ukrzaliznytsia and assigned ratings to the new entity Ukrainian Railway, using the same credit-linked public-sector entity (PSE) approach as per Fitch`s PSEs rating criteria.
Ukrainian Railway, a new 100% public state-owned joint stock company, commenced its operations on 1 December 2015. It takes over all financial, legal and operating responsibilities from Ukrzaliznytsia Group. This includes Ukrzaliznytsia`s $500 million eurobonds due 2018 structured via Shortline Plc loan participation notes (LPN), and other outstanding debt of Ukrzaliznytsia Group.
Fitch says it views Ukrainian Railway as a credit-linked PSE to its sponsor, Ukraine (CCC/C/CCC) and has judged ”control” from and ”strategic importance” for the Ukrainian government as ”stronger” according to its PSE criteria notching guidelines.
This reflects the company`s strategic role in the national railways system and its strong legal links with the Ukrainian government, which has approval powers on all strategic decisions, including top management appointment, tariff setting, investment and debt planning.


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