Fitch downgrades Ukrzaliznytsia again: Eurobonds declared in default

For the second time in the last two weeks, the international rating agency Fitch Ratings has downgraded the credit rating of JSC Ukrzaliznytsia. The reason for the decision was the suspension of coupon payments on the company's Eurobonds, which the agency considered as a restricted default.

As reported on the official Fitch website, the long-term default rating of the issuer Ukrzaliznytsia was downgraded to RD (restricted default). This status means that the borrower has not fulfilled part of its debt obligations, but continues to service other debts.

Separately, Fitch reviewed the ratings of the company's Eurobonds with different maturity dates. In particular, Ukrzaliznytsia's securities maturing in 2026 and 2028 were downgraded from C to D, which corresponds to a default on specific obligations.

The agency explained that failure to pay interest or principal on a debt on time, even taking into account the grace period, is automatically considered a default. In such cases, Fitch applies RD or D ratings, depending on the nature of the violations and the amount of unfulfilled obligations.

According to the agency, on January 22, a default was recorded on Ukrzaliznytsia’s Eurobonds in the amount of $703 million with a maturity date of 2026. This was the first episode of default on debt obligations, which caused the rating review.

Subsequently, on January 27, Fitch recorded another case of default — this time on securities in the amount of $352 million with a maturity date of 2028. Together, these events became the basis for another downgrade of the company’s ratings.

Thus, the international agency notes the deterioration of Ukrzaliznytsia's debt discipline, which increases risks for investors and complicates the company's further access to international capital markets.