Moody's Investors Service has downgraded the long-term foreign-currency senior unsecured debt rating of PrivatBank to C from Ca, reads a report on the rating agency's website.

"The bank's baseline credit assessment ("BCA"), adjusted BCA, long and short-term local and foreign currency deposit ratings, and its long and short-term Counterparty Risk Assessments were unaffected by the rating action," the posting states.

"The downgrade of PrivatBank's senior unsecured debt rating to C from Ca primarily reflects Moody's expectation that senior debt holders will sustain material losses as a result of bail-in and conversion into equity. The C senior unsecured debt rating does not carry outlooks. Moody's will then withdraw the C foreign currency senior unsecured debt rating of PrivatBank," Moody's said.

"The downgrade of the PrivatBank's senior unsecured debt rating to C from Ca primarily reflects Moody's expectation that PrivatBank's eurobond holders will incur significant losses consistent with a C rating category as the bank's eurobonds were bailed-in and converted into equity as part of the bank's recapitalization process," the agency experts said.

"In December 2016 the government of Ukraine acquired 100% of the shares of PrivatBank and thereby nationalized the bank. At the same time, the National Bank of Ukraine declared the bank insolvent, estimating its capital shortfall at UAH 148 billion, which is equivalent to 67.5% of the bank's total unconsolidated assets as at January 1, 2017, they said.

"To cover capital shortfall the government injected capital of UAH 117 billion and bailed-in PrivatBank's non-deposit unsecured creditors for the amount of UAH 29.4 billion ($1.08 billion) including bond holders for the amount of $595 million," according to the document.