Fitch downgrades Ukraine IDRs to RD

Fitch Ratings said it downgraded Ukraine’s long- and short-term foreign currency issuer default ratings to RD (Restricted Default) from C.

At the same time, the agency affirmed the long-term local currency issuer default rating at CCC, senior unsecured foreign-currency issue ratings on all outstanding external issues at C, senior unsecured local-currency issue ratings at CCC, senior unsecured foreign-currency issue ratings on all outstanding domestic issues at CCC and country ceiling at CCC.

The 10-day grace period on Ukraine's $500 million eurobond maturing on Sept. 23, 2015 has elapsed without payment being made. Fitch therefore judges Ukraine to be in default on its sovereign eurobond obligations.

On Sept. 24, Ukraine launched the exchange offer for about $18 billion in direct and government-guaranteed eurobonds. The agency considers that this represents a distressed debt exchange under its criteria that results in material losses to bondholders and is being conducted to avoid default.

The ratings will be upgraded shortly after Fitch determines that the exchange has been successful. The new rating will be consistent with Ukraine's prospective credit profile and debt structure. The Ministry of Finance said it plans to conclude the exchange by Oct. 27.

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