Fitch assigns VF Ukraine notes B

Fitch Ratings said it assigned VF Ukraine PJSC a first-time long-term foreign-currency issuer default rating of B and also assigned VFU Funding plc’s proposed loan participation notes an expected rating of B/ RR4/50%.

The notes will be offered by VFU Funding on a limited recourse basis to refinance a bridge facility used to acquire VF Ukraine’s shares in a leveraged buyout transaction. The proceeds will be transferred to VF Ukraine in as an unsecured loan from VFU Funding. The notes are rated on a par with VF Ukraine’s IDR given the LPN loan will form a direct and unconditional senior unsecured obligation of VF Ukraine. Also, under the trust deed VFU Funding assigns all its rights under the LPN loan to the trustee acting on behalf of the noteholders.

“The ratings of VF Ukraine are constrained by Ukraine’s country ceiling of B. Its credit profile benefits from its solid market position, ownership of the company’s backbone infrastructure, high profitability and a moderately competitive environment. This is counterbalanced by the lack of product and geographical diversification, high FX risks and further significant capex needs for 4G roll-out over the next few years,” Fitch said in a press release.

The positive outlook corresponds to the sovereign rating, assuming the country ceiling will move in line with a potential upgrade of Ukraine’s rating.

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