Fitch downgrades Ukreximbank, Oschadbank

Fitch Ratings said it downgraded State Export-Import Bank of Ukraine’s and State Savings Bank of Ukraine’s long-term foreign-currency issuer default ratings and foreign-currency senior debt ratings to CC from CCC and affirmed the banks' long-term local-currency issuer default ratings at CCC, short-term foreign-currency issuer default ratings at C and national long-term ratings at AA-(ukr) as well as affirmed Ukreximbank’s subordinated debt at C. The outlook is stable.

The downgrade follows the announcement by Ukraine's Ministry of Finance on the sovereign's external debt restructuring, in which the ministry indicated that the external debt of Ukreximbank and Oschadbank, alongside that of certain other quasi-sovereign entities, "will be included in the debt operations.” The downgrade reflects Fitch's view that defaults by both banks on their external debt obligations now appear probable given the announcement and the government's full ownership of the banks.

The affirmation of the banks' long-term local-currency issuer default ratings reflects the fact that their local currency-denominated liabilities would not be affected by any restructuring process, the agency said.

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