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Fitch Ratings has lowered the long-term credit rating in foreign currency from "CCC" to "C" level for the energy holding company DTEK, which is owned by a businessman Rinat Akhmetov, saying DTEK was very sensitive to fluctuations in foreign currency exchange rates.
"The rating may be lowered in the future amid unfavorable developments in Ukraine, as well as a failure in refinancing its eurobonds in the coming weeks," Fitch said in a statement.
At the same time, Fitch lowered DTEK’s long-term local currency rating from "BBB" to "C" by assigning a recovery rating of “RR5.”
A “C” rating indicates that default is imminent, Fitch said in its statement.
As emphasized in the agency’s report, DTEK is adversely affected by currency fluctuations, as the company's liabilities are denominated in dollars and euros, with the situation being further aggravated by the instability of the Ukrainian banking system, while a significant share of the company’s funds has been concentrated in Ukrainian banks.
"A significant risk is posed by a political instability in the country and sustained forecast of the negative dynamics of the Ukrainian economy as a whole,” Fitch said.
DTEK is the largest private vertically integrated energy company in Ukraine, being the part of the System Capital Management (SCM) financial and industrial group of Rinat Akhmetov.
On February 16, Fitch Ratings downgraded the long-term rating of Ukraine in foreign currency from 'CCC' to 'CC', while reaffirming local currency rating at 'CCC'. Then, similar rating actions were performed with respect to Ukrzaliznytsia, Naftogaz of Ukraine and the city of Kharkiv.