Fitch affirms Ukraine’s Naftogaz rating at ‘CC’ – company

International rating agency Fitch affirmed the Long-Term Issuer Default Rating (IDR) of NJSC Naftogaz Ukrainy at 'CC', Naftogaz reported.

"This rating is higher than the sovereign rating of Ukraine ('RD'). According to the agency, Naftogaz has moderate linkage with the state, which allows it to evaluate the company on a standalone basis," Naftogaz said in a statement on its website on Wednesday.

According to it, Fitch also affirmed the rating of Naftogaz eurobonds issued by Kondor Finance Plc at 'C'. The Recovery Rating was left at 'RR6', as the company continues to make timely and full payments on the eurobonds restructured in 2023.

"Fitch names the preservation of infrastructure and stable production growth, as well as the improved company's financial performance, in particular, cash flow from operating activities, as one of the key factors that influenced the company's position," Naftogaz said.

At the same time, the agency also points out that the rating is significantly affected by high operational risks amid the ongoing war with Russia, the cessation of gas transit, slow payments for gas, and limited external funding options.

In addition, Fitch noted the absence of any compensation from the state for Naftogaz's fulfillment of the public-service obligations (PSO) imposed on it since the beginning of the war. The management continues to work with the state to receive compensation for PSO and the difference in tariffs in 2024.