Fitch lowers Naftogaz

Fitch Ratings said it downgraded OJSC Naftogaz of Ukraine's long-term local- and foreign-currency issuer default ratings to B from B+ and kept ratings on Rating Watch negative.

This follows the downgrade of Ukraine's long-term foreign- and local-currency issuer default ratings to B+ from BB-.

The $500 million senior unsecured eurobond due 2009 was downgraded to B+ from BB- and its recovery rating of RR4 affirmed.

Fitch said it is keeping ratings on watch because the company is in technical default on its $500 million eurobond due to non-publication of its fiscal year 2007 financial statements.

The company has not yet been able to arrange financing for winter gas storage purchases, and the agency said it believes current government subsidies inadequately compensate for losses in its residential sales business.

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