Fitch upgrades Kharkov

Fitch Ratings said it upgraded the city of Kharkov’s long-term foreign-currency issuer default ratings to CCC from C.

Under European Union credit rating agency regulation, the publication of International Public Finance reviews is subject to restrictions and must take place according to a published schedule, except when it is necessary for agencies to deviate from this in order to comply with legal obligations, Fitch said.

The agency said it interprets this provision so that in situations in which there is a material change in the creditworthiness of the issuer, it would be inappropriate to wait until the next scheduled review date to update the rating or outlook.

In this case, Fitch said the deviation was caused by the sovereign upgrade of Ukraine.

Kharkov’s ratings are capped by the sovereign’s ratings, the agency said. The weak institutional framework governing Ukrainian sub-nationals remains a constraint on the city’s ratings, the agency added.

The city is currently free from external debt obligations and it continues to record a satisfactory budgetary performance, Fitch said.

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