Standard & Poor's Ratings Services, an international credit rating agency, has lowered its long-term corporate credit rating on the State Railway Administration (Ukrzaliznytsia) from 'CC' to 'SD' (selective default) following Ukrzaliznytsia’s announcement that it has stopped making principal payments on certain debt obligations and will aim to restructure them, the Interfax Ukraine news agency reports.

At the same time, the rating agency affirmed its 'CC' issue ratings on Eurobonds worth USD 500 million due in 2018.

S&P points out that Ukrzaliznytsia continues to make interest payments on these obligations as well as payments on the Eurobonds. “We therefore view the company as being in a selective default situation,” the rating agency said.

According to S&P, the rating agency continues to view the proposed restructuring of the Eurobonds as tantamount to default. “In our view, therefore, the default of Ukrainian Railways on these obligations is a virtual certainty,” the rating agency said.

As reported, Ukrzaliznytsia announced on 12 May that it had stopped making principal payments on certain domestic debt obligations, cross-defaulted on its Eurobonds, and planned to restructure UAH 32 billion out of its total debt of UAH 37.5 billion to private creditors. Fitch has also downgraded Ukrzaliznytsia’s rating to selective default.