Fitch Ratings has downgraded the City of Kyiv's Long-term local currency Issuer Default Rating (IDR) to 'C' from 'CC' and its National Long-term rating to 'CCC(ukr)' from 'BB(ukr)', Fitch said in a press release.

Following the downgrade of the city's Long-term local currency IDR and National Long-term rating, Fitch has downgraded the following senior debt issues subject to restructuring to 'C' and 'CCC(ukr)':

- Series '4-H' UAH 2.375 million bond due in October 2015

- Series '2-F' UAH 875 million bond due in December 2015

- Series '3-G' UAH1.915 million bond due in December 2015.

According to the press release, the downgrade of Kyiv's Long-term local currency IDR reflects Fitch's view that default by the city on certain senior debt obligations is now almost inevitable.

This follows recent announcements by the city to extend the maturities of these bonds (series F, G and H), Fitch said.

Fitch treats announced restructurings as defaults in accordance with its distressed debt exchange (DDE) criteria. However, the proposals do not involve any write-down of principal, and coupons payable on the bonds will not decrease.

Fitch also notes that Kyiv will face refinancing of its outstanding $250 million eurobonds in November 2015 and $300 million in July 2016. According to the city's announcements, Kyiv launched consent solicitations to extend the maturities of these eurobonds. Kyiv has initiated the restructuring process on these external debt obligations as a result of sovereign intervention.

Fitch would expect to downgrade the city's Long-term foreign and local currency IDRs further to 'RD' (Restricted Default) at the point of execution of the exchange offers on outstanding senior bonds, should they go ahead and if this restructuring meets Fitch's DDE criteria or if the city misses the payment according original schedule.

Fitch will review the city's ratings once the debt exchanges are completed and sufficient information is available on Kyiv's credit profile. However, the rating will likely remain low, given high country risks and Ukraine's 'CCC' Country Ceiling.