On the brink of default: Fitch downgraded Ukrzaliznytsia’s rating to ‘C’ after missed coupon payments

International ratings agency Fitch Ratings has downgraded UZ’s long-term credit rating to “C.” This means the company is effectively on the verge of default on its debt obligations.

This is stated in the agency’s press release.

The rating was lowered from “CC” after UZ stopped paying coupons on its eurobonds. Fitch said that if the interest is not paid within the grace period, the rating will automatically be lowered to “RD.” And that is already a restricted default.

UZ officially announced the decision to suspend payments on January 9. The company explained this by the need to preserve liquidity in wartime in order not to halt transportation and to be able to pay employees’ salaries.

UZ’s financial situation remains critical due to extensive destruction of infrastructure, deterioration of operational processes, and constant attacks by Russia, the company’s press release says.

According to Fitch, UZ’s total eurobond debt exceeds one billion dollars. More than seven hundred million of this amount the company must repay as early as July 2026.

These are eurobond issues that were raised to finance infrastructure projects and support liquidity many years ago — in particular, on the eve of Euro 2012. Over the years, they have been refinanced more than once, and the holders of the securities have become various financial institutions.