REUTERS
International rating agency Standard & Poor's Ratings Services has lowered its credit rating of the State Administration of Railway Transport of Ukraine (Ukrzaliznytsia) from 'CC' level to the level of 'SD' (selective default), the agency has reported.
At the same time S&P reaffirmed the issue rating of senior secured loan participation notes (Eurobonds) due 2018 and issued by financing company Shortline PLC at 'CC' level.
According to the report, downgrading of Ukrzaliznytsia is attributed to its announcement regarding the failure to carry out principal payments for a number of obligations and plans for restructuring these obligations
"At the same time, the company continues to pay interest on the said loans and all the necessary payments for issuance of loan participation notes worth $500 million. As a result, we believe that the company is in a state of selective default," the S&P report reads.
The agency noted it would expect to classify that restructuring of the notes as tantamount to default.
"In our view, therefore, the default of Ukrzaliznytsia's foreign currency debt is a virtual certainty," according to the statement.
As UNIAN reported earlier, in early May, Standard & Poor's Ratings lowered the credit rating of Ukrzaliznytsia to the sovereign level 'SS' on the backdrop of restructuring talks regarding the agency’s bonds.