Fitch downgrades Kyiv and Kharkiv to 'C'

The Long-term foreign currency IDRs of the City of Kyiv and the City of Kharkiv are constrained by the sovereign, in line with Fitch's criteria of 'International Local and Regional Governments Rating Criteria outside United States'. Under our criteria, a local or regional government can only be rated above the sovereign in exceptional circumstances, Fitch said in a statement.

A sovereign downgrade or any adverse change leading to the partial or full containment of the city's ability and/or willingness to service its debt would lead to a downgrade, says the report.

Positive rating action in relation to Kyiv is currently unlikely. However, a sovereign upgrade along with sustainable restoration of the city's financial flexibility leading to withdrawal of material downside credit risks would lead to an upgrade.

In addition, Fitch downgraded Kyiv’s senior unsecured eurobonds to 'C.' Long-term local currency IDRs were affirmed at 'CC,' as well as short-term foreign currency IDR was affirmed at 'C.'

It is also reported that Fitch downgraded Kharkiv’s long-term foreign currency IDRs from 'CC' to 'C,' but long-term local currency IDRs were affirmed at 'CCC.' Kharkiv’s short-term foreign currency IDR was affirmed at 'C.'

As UNIAN reported earlier, Fitch Ratings downgraded Ukraine's long-term foreign currency IDR to 'C' from 'CC' on a recent external debt restructuring announcement.