S&P cuts Ukrainian Railways

S&P said it lowered Ukrainian Railways’ issuer credit rating to CCC- from CCC and removed all ratings from CreditWatch with negative implications where they had been placed on June 1.

“Deterioration in Ukraine's financial capacity to provide further financial support may weaken UR's liquidity position and increase the risk of default. Following the Ukrainian government's decision to offer foreign debt restructuring to its creditors, we believe further government financial support is significantly less likely to be forthcoming as Ukraine may prioritize its own general budget, defense, and reconstruction needs. Taking this into account, and considering that UR has depended on government support since the war started in February 2022, we believe UR's debt repayment capacity has weakened,” S&P said in a press release.

Absent additional government help or deep cuts in operating expenses, S&P said it sees UR likely needing to restructure its payment schedule or default within the next six months, though the upcoming payments in 2022-2023 are low.

The outlook is negative.

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