OREANDA-NEWS. Fitch Ratings has downgraded the City of Kharkov's Long-term foreign currency Issuer Default Rating (IDR) to 'CC' from 'CCC'. The agency has also affirmed the city's Long-term local currency IDR at 'CCC' and Short-term foreign currency IDR at 'C'.

Under EU credit rating agency (CRA) regulation, the publication of International Public Finance reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations.

Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that we believe makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status.

The next scheduled review date for Fitch's rating on the City of Kharkov was 24 April 2015. However, following the downgrade of Ukraine's Long-term foreign currency IDR on 13 February 2015 (see 'Fitch Downgrades Ukraine's FC IDR to 'CC'; Affirms LC IDR at 'CCC' dated 13 February 2015 at www.fitchratings.com) we have taken a similar rating action on the city as it is rated at the same level as the sovereign.

KEY RATING DRIVERS
The City of Kharkov's ratings are constrained by the sovereign, in line with Fitch's criteria of 'International Local and Regional Governments Rating Criteria outside United States'. Under our criteria, a local or regional government can only be rated above the sovereign in exceptional circumstances.

The rating drivers of the Long-term local currency IDR are unaffected, leading to its affirmation.

RATING SENSITIVITIES
Any rating change to Ukraine would lead to similar changes to the city's ratings. A downgrade could also result from a delay in the repayment of the city's maturing debt.