OREANDA-NEWS. Fitch Ratings has downgraded the City of Kyiv's, the City of Kharkov's and Odessa Region's Long-term local currency Issuer Default Ratings (IDRs) to 'CCC' from 'B-'. The agency has also affirmed their Long-term foreign currency IDRs at 'CCC' and Short-term foreign currency IDRs at 'C'.

The National Long-term ratings were affirmed at 'BBB(ukr)' for City of Kyiv, at 'A+(ukr)' for City of Kharkov and 'AA-(ukr)' for Odessa Region. The Outlook is Negative.

Kyiv's outstanding senior unsecured domestic bonds totalling UAH5.4bn have been downgraded to 'CCC' from 'B-' while its senior eurobonds totalling USD550m have been affirmed at 'CCC'. The Long-term local currency rating of Kharkov's outstanding UAH99.5m senior unsecured bonds has also been downgraded to 'CCC' from 'B-'.

Under EU credit rating agency (CRA) regulation, the publication of International Public Finance reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations.

Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that Fitch believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status.

The next scheduled review date for Fitch's rating on the City of Kyiv was 10 October 2014 and for the City of Kharkov and Odessa Region 14 November 2014. However, following the downgrade of Ukraine's Long-term local currency IDR on 22 August 2014 (see 'Fitch Downgrades Ukraine's LC IDR to 'CCC'; Affirms FC IDR at 'CCC' dated 22 August 2014 at www.fitchratings.com) Fitch have taken a similar rating action on these issuers as they are rated at the same level as the sovereign.

KEY RATING DRIVERS
The City of Kyiv's, the City of Kharkov's and Odessa Region's ratings are equalised with 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.

The rating factors for National ratings are unaffected, leading to today's affirmation.

RATING SENSITIVITIES
Any rating change to Ukraine would lead to similar changes to the Ukrainian subnationals' ratings.

The rating actions are as follows:
City of Kyiv
Long-term local currency IDR downgraded to 'CCC' from 'B-'
Long-term foreign currency IDR affirmed at 'CCC'
Short-term foreign currency IDR affirmed at 'C'
National Long-term rating affirmed at 'BBB(ukr)'; Outlook Negative
Senior unsecured notes' long-term foreign currency rating affirmed at 'CCC'
Senior unsecured notes' long-term local currency rating downgraded to 'CCC' from 'B-'
Senior unsecured notes' National long-term rating affirmed at 'BBB(ukr)'

City of Kharkov
Long-term local currency IDR downgraded to 'CCC' from 'B-'
Long-term foreign currency IDR affirmed at 'CCC'
Short-term foreign currency IDR affirmed at 'C'
National Long-term rating affirmed at 'A+(ukr)'; Outlook Negative
Senior unsecured notes' long-term local currency rating downgraded to 'CCC' from 'B-'
Senior unsecured notes' long-term rating affirmed at 'A+(ukr)'

Odessa Region
Long-term local currency IDR downgraded to 'CCC' from 'B-'
Long-term foreign currency IDR affirmed at 'CCC'
Short-term foreign currency IDR affirmed at 'C'
National Long-term rating affirmed at 'AA-(ukr)'; Outlook Negative