S&P has upgraded "Ukrzaliznytsia's" rating: the risk of default has decreased, but it has not been eliminated.

This is mentioned in the S&P statement

"The ratings of JSC "Ukrzaliznytsia" have been upgraded to "CCC-" regarding coupon payments; the outlook is "Negative," the statement emphasizes.

The risk of default for UZ after coupon payments has decreased, but not disappeared, given the significant liquidity pressure on the company due to the war in Ukraine and the high uncertainty regarding the Ukrainian government's financial capacity to provide further support to the company.

The decision for UZ to make coupon payments in January was made based on the confidence that the authorities would approve a tariff increase.

"Although UZ's liquidity has significantly worsened, we understand that from the company's management, we received information that there is now a higher likelihood of a tariff increase in 2025, which could somewhat improve UZ's ability to generate cash flows, although a final decision on the tariff increase has not yet been made," the rating agency's statement notes.

S&P acknowledges that UZ may need to restructure its payment schedule or declare a default on debt payments within the next 6-12 months, as without additional government intervention or significant reductions in operating costs, the available liquidity will be exhausted within that timeframe.

The agency reminded that in 2025, UZ's coupon payments will be low – around $45 million, while a significant payment will be due in July 2026 - $703 million.

Reminder:

"Ukrzaliznytsia" has decided to make payments on Eurobonds due in January 2025, in order to maintain constructive relations with their holders.