According to Fitch's press release, the downgrade of Kyiv's Long-term foreign currency IDR follows missed payment on the city's $250 million eurobond and the subsequent activation of the cross default clause on the $300 million eurobond. The city introduced an interim moratorium on any payments to its eurobond holders on Nov. 6, 2015. According to the original schedule Kyiv's $250 million eurobond final maturity date was Nov. 6, 2015 and its $300 million eurobond July 11, 2016.
Fitch treats the introduction of the interim payment moratorium on the city's eurobonds as defaults in accordance with its distressed debt exchange (DDE) criteria, leading to today's downgrade of the city's Long-term and Short-term foreign currency IDRs to 'D' from 'C'.
The introduced payment moratorium will be valid until the eurobonds' conditions are amended and the exchange offer accepted. The right for the city to suspend the repayment of its eurobonds was granted by Ukraine's parliament in May 2015. The city was mandated to extend the maturity of its external debt as part of a broader exercise to support Ukraine's public sector finances and external liquidity following the introduction of the IMF's Extended Fund Facility for Ukraine in March 2015.
It should be noted that any proposals for restructuring lead to a downgrade by credit rating agencies. For example, in August, Fitch downgraded the credit rating of Ukraine to the "C" indicating that default was inevitable.