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Fitch upgrades Ukraine’s oil and gas company to "CCC" from "CC"

November 26, 2015, 14:32 UTC+3
According to Fitch, "the rating actions follow the upgrade of the sovereign rating to "CCC" from "RD"
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MOSCOW, November 26. /TASS/. Fitch Ratings has upgraded the Long-term foreign currency Issuer Default Rating (IDR) of Ukraine's national oil and gas company, Naftogaz, to "CCC" from "CC", the agency reported on Thursday.

The local currency IDR has been affirmed at "CCC", the report said.

According to Fitch, "the rating actions follow the upgrade of the sovereign rating to "CCC" from "RD".

"Naftogaz' ratings are aligned with those of Ukraine, its sole shareholder, and reflect its strong links with the state, the continued weakness of the company's financial profile and its exposure to political risks. We consider that timely financial support from the state remains critical for its solvency as Naftogaz still has a significant operating deficit — albeit reducing due to staged price liberalisation - caused by the disparity between imported gas prices and domestic gas tariffs for households and heat generation companies. We believe that the company is likely to default without such support," the agency said.

Fitch upgraded Ukraine to "CCC" as the country has emerged from default on commercial external debt, issuing new bonds on 12 November to holders of $15 bln in defaulted Eurobonds. The restructuring pushed out maturities to 2019-2027.

On November 25, Naftogaz of Ukraine was banned form buying natural gas from Russia. The prime minister said the main reason for the decision is the difference in European and Russian gas prices, with European ones being "much better", as Arseniy Yatsenyuk said.

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