Fitch upgrades state banks ratings to Ukraine sovereign level

Fitch Ratings upgraded the issuer default ratings of
all Ukrainian state-owned banks to B with a Positive outlook, the agency
reported on Sept. 24. The rating move mirrors the recent upgrade of Ukraine’s sovereign rating and outlook.
The upgrades apply to Oschadbank (OSCHAD), Ukreximbank (EXIMUK), Privatbank
(PRBANK) and Ukrgazbank, reflecting Fitch’s view that “the authorities’ ability
to provide support to the banks, in case of need, has improved”.

Recall, following the sovereign rating upgrade on
Sept. 6, Fitch upgraded the ratings of poultry and crop producer MHP (MHPSA) to
B+, Ukrainian Railways (RAILUA) and Naftogaz (NAFTO) to B, and Metinvest to
BB-.  

Alexander Paraschiy: There is no
surprise in Fitch’s move, which confirms the tight ties between the state banks
and the Ukrainian government, which makes their default risk identical, in our
view.

We believe that the upgrades of state banks’ ratings
will conclude the series of upgrades of Ukraine-related Eurobond issuers. Only
two firms from Fitch’s coverage of the Ukrainian Eurobond universe remain not
upgraded since early September: sunflower oil and grain trader Kernel (KERPW,
B+) and coal and utility holding DTEK Energy (DTEKUA, C). As we wrote before, we do not
expect Kernel’s rating will be upgraded this time. DTEK Energy’s rating upgrade
is contingent on its ability to resolve its outstanding debt issue with a
Russian bank, not on the sovereign rating upgrade.