OREANDA-NEWS. Fitch Ratings has downgraded JSC The State Export-Import Bank of Ukraine's (Ukreximbank) foreign currency Issuer Default Ratings (IDRs) to 'RD' (Restricted Default) from 'C', and affirmed the bank's foreign currency senior unsecured and subordinated debt ratings at 'C'. The bank's other ratings are unaffected by these rating actions.

KEY RATING DRIVERS

The downgrade follows the bank's announcement on the agreement reached with the holders of its USD750m eurobond due on 27 April 2015 on the extension of the bond's maturity. In accordance with Fitch's distressed debt exchange (DDE) criteria, a DDE is deemed to have occurred if a restructuring imposes a material reduction in terms (including extension of maturity) compared with the original contractual terms of an entity's financial obligations, and the restructuring is conducted to avoid bankruptcy, insolvency or intervention proceedings, or a payment default. The downgrade of Ukreximbank's IDRs reflects Fitch's view that the bank's debt maturity extension meets these criteria.

The three-month maturity extension is the initial step in the bank's external debt restructuring, which also includes a USD600m senior eurobond due in January 2018 and a USD125m subordinated bond due in February 2016. The bank intends to finalise the USD750m eurobond restructuring by 27 July 2015. Fitch understands that the bank's remaining eurobonds will also be the subject of negotiations with creditors in the near term.

The affirmation of Ukrexim's debt ratings at 'C' reflects that these ratings are already at the lowest possible level for instrument ratings.

Fitch has not taken any action on Ukrexim's 'ccc' Viability Rating, as the agency currently has insufficient information, particularly with respect to foreign currency liquidity, to determine whether the bank has failed, i.e. whether it could have redeemed the USD750m eurobond were it not for the Resolution of the National Bank of Ukraine obliging the bank to restructure its debt.

RATING SENSITIVITIES

Fitch expects to review and upgrade Ukrexim's foreign-currency IDRs once the bank has completed its debt restructuring and sufficient information is available on the bank's post-restructuring credit profile. The ratings are likely to remain closely linked to those of the Ukrainian sovereign (CC/C/CCC).

The rating actions are as follows:

Ukreximbank:
Long-term foreign currency IDR: downgraded to 'RD' from 'C'
Short-term foreign currency IDR: downgraded to 'RD' from 'C'
Senior unsecured debt of Biz Finance PLC: affirmed at 'C'/Recovery Rating 'RR4'
Subordinated debt: affirmed at 'C'/Recovery Rating 'RR5'
Long-term local currency IDR: 'CCC', unaffected
Support Rating: '5', unaffected
Support Rating Floor: 'No Floor', unaffected
Viability Rating: 'ccc', unaffected
National Long-term rating: 'AA-(ukr)'; Outlook Stable, unaffected.