S&P announces the imminent default of Ukrainian Railways (UZ).
Tuesday, December 13, 2022

S&P announces the imminent default of Ukrainian Railways (UZ).

The international rating agency S&P Global Ratings lowered the rating of the state company UZ from “CCC-” to “SS.” This happened in response to the company’s request to the owners of its Eurobonds due in 2024 and 2026 to postpone all payments for 24 months. The agency noted that UZ is likely to implement its debt restructuring plans in the next few weeks, which will be tantamount to default. S&P clarified that it will downgrade UZ’s ratings to “SD” (selective default) after the debt restructuring is implemented but will subsequently reflect the new debt terms in the rating after the debt restructuring takes effect. At issue are two series of Eurobonds due in July 2024 for $594.9M and the July 2026 issue for $300M. These bonds comprise almost 80% of the railroad company’s total debt. Deferring debt service payments will allow the company to use its liquidity to cover current operating and capital expenditures.

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