S&P lowers Ukrzaliznytsia notes, rates new notes CCC+

Standard & Poor’s said it affirmed the corporate credit rating on Ukrainian Railways (Ukrzaliznytsia) at SD (selective default).

The agency also said it lowered the ratings to D from CC on the $500 million loan participation notes due 2018, issued by financing vehicle Shortline plc.

S&P also said it subsequently withdrew the ratings.

The agency also said it assigned a CCC+ rating to the new $500 million loan participation notes due 2021 issued by Shortline.

The actions follow Ukrzaliznytsia’s replacement of its loan participation notes due 2018 with new notes due 2021.

S&P said it views the restructuring of the original 2018 loan participation notes as a distressed exchange and tantamount to default, primarily because of the forced nature of the restructuring and significant maturity extension in the new notes.

The company is considered to be in selective default, reflecting the company’s failure to pay on a number of its local bank loans and its intentions to restructure them.

Ukrzaliznytsia also is in cross-default to the majority of its bank debt, although it continues to service it, S&P said.

The company’s operating performance improved in 2015, mainly on the back of higher tariffs despite the weak economic environment in Ukraine, the agency said.

© 2015 Prospect News.
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