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Fitch downgrades Ukraine’s rating amid reports of debt write-off

August 27, 2015, 21:30 UTC+3
Ukraine’s Prime Minister Arseniy Yatsenyuk said at an extraordinary cabinet meeting that Ukraine had agreed with foreign creditors on debt restructuring, including a 20% write-off of Kiev's debt
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© Stepan Petrenko/TASS

MOSCOW, August 27. /TASS/. Fitch lowered the long-term foreign currency Issuer Default Rating of Ukraine’s to ‘C’ from ‘CC’, the international rating agency said on Thursday.

The rating action followed the announcement made by the government of Ukraine today that it had reached an agreement with a representative group of creditors for a debt exchange that would result in a 20% reduction in principal and a postponement of principal repayments on $18 bln of government and government-guaranteed Eurobonds, Fitch said. "This represents a Distressed Debt Exchange (DDE) that results in material losses to bondholders and is being conducted in order to avoid default," the rating agency said.

The rating agency does not envisage developments that would result in positive rating action at the present time, Fitch reported.

Ukraine agrees foreign debt restructuring

Earlier on Thursday, Ukraine’s Prime Minister Arseniy Yatsenyuk said at an extraordinary cabinet meeting that Ukraine had agreed with foreign creditors on debt restructuring, which involves a 20% write-off of the Ukrainian debt. According to Yatsenyuk, Russia has not joined to the creditors' committee. "We declare that Russia will not receive other conditions," he said.

In her turn, Ukraine’s Finance Minister Natalie Jaresko added that Ukraine had agreed to write off $3.8 billion of $19.3 billion debt. The repayment of the loan postponed for 4 years.

According to the Russian Finance Minister Anton Siluanov, Ukraine reached that agreement with commercial creditors, but Russia is an official lender and the restructuring program is not applied to it.

"We regard ourselves as official creditors. They meant first of all the settlement of debt to commercial creditors, while the settlement of debt to official creditors, with countries like Russia, is a separate issue," the Minister said.

Siluanov added that the Russia may invest the funds it expects from Ukraine in national infrastructure projects.

Russia took a tough stance on the possibility of easing the payments terms for Ukraine and consistently refused to negotiate on restructuring programs offered by Kiev.

Moscow expects a full repayment of the loan worth $3 billion in December 2015. In late June, Ukraine made a payments worth $75 mln to Russia in compliance with the schedule.

 
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