Fitch Ratings has downgraded the City of Kyiv's Long-term local currency Issuer Default Rating (IDR) to 'Restricted Default' (RD) from 'C' and its National Long-term rating to 'RD(ukr)' from 'CCC(ukr)'.

The downgrade of Kyiv's Long-term local currency IDR follows the maturity extension of the city's domestic bonds (series G and H), totaling UAH 4.29 billion, by 12 months each, from the original maturities of October 1 and December 7, 2015, respectively, the rating agency said in a press release.

"Fitch treats restructurings of domestic bonds as defaults in accordance with its distressed debt exchange (DDE) criteria. Therefore we have downgraded the city's Long-term local currency IDR and National Long-term rating to 'RD' and 'RD(ukr)'," the agency said.

Fitch expects Kyiv's budgetary performance to remain volatile.

"This is due to the overall weakness of the sovereign's public finances, lower predictability of the country's fiscal policy and a short planning horizon, exacerbated by a negative macro-economic trend," the agency said,

At the same time, Fitch retained the city's Long-term foreign currency IDR at 'C' (default is imminent or inevitable), which reflects the expected restructuring of its eurobonds.