Fitch improves rating outlook for Ukrainian Railways, Naftogaz

Fitch Ratings reported on Aug. 13 that it had revised
the Outlook on Ukrainian Railway’s (RAILUA) Long-Term Issuer Default Ratings to
Positive from Stable, keeping the rating at B. The outlook revision for the
company follows the corresponding revision of Ukraine’s sovereign outlook last week.

On Aug. 11, Fitch Ratings also upgraded the rating
outlook to Positive (keeping the rating at B level) for another state-controlled
company, Naftogaz (NAFTO) for the same reasons.

The agency can further amend Ukrainian Railways’ and
Naftogaz’ rating or outlook in case it revises Ukraine’s sovereign rating. A
negative rating action could follow a possible “dilution of the linkage” of the
companies to the government or decrease of their standalone rating due to the
weakening of their liquidity positions.

Alexander Paraschiy: Those are expected moves by Fitch, which are not related to
company-specific issues. We also expect the agency to upgrade the rating
outlooks for Ukraine’s state-owned banks, Oschadbank (OSCHAD) and Ukreximbank
(EXIMUK), which currently have neutral rating outlooks.