Vodafone Ukraine Under Debt Pressure: Fitch Updates Company’s Rating
21 May 12:21
The international credit rating agency Fitch Ratings has downgraded the long-term issuer default rating and senior unsecured debt rating of PJSC “VF Ukraine,” which operates under the Vodafone Ukraine brand, from “CCC” to “CCC-,” according to "Komersant Ukrainian"
The agency cited the significant risk of refinancing the company’s Eurobonds maturing in February 2027 as the reason for this decision.
According to Fitch, $280.1 million in Vodafone Ukraine Eurobonds remained outstanding as of December 2025. The agency believes that the company has limited access to international capital markets and insufficient liquidity in foreign accounts to cover the upcoming maturity.
Why Fitch downgraded Vodafone Ukraine
The key factor behind the downgrade is the risk associated with the upcoming Eurobond redemption.
This refers to Vodafone Ukraine’s bonds:
| Indicator | Data |
|---|---|
| Issue size | $300 million |
| Outstanding balance | $280.1 million as of December 2025 |
| Coupon | 9.625% per annum |
| Maturity | February 2027 |
| New Fitch rating | CCC- |
| Recovery rating | RR4 |
Fitch notes that the main risk is not Vodafone Ukraine’s operating activities, but rather the ability to refinance or repay external debt in a timely manner amid currency restrictions and limited access to international capital.
Fitch Ratings is one of the world’s three largest international rating agencies, alongside S&P Global Ratings and Moody’s.
The agency assesses the creditworthiness of countries, companies, banks, and debt instruments. Its ratings indicate the level of risk associated with default on debt obligations.
The Role of NBU Restrictions
Separately, Fitch highlights the foreign exchange restrictions imposed by the National Bank of Ukraine. The agency expects the NBU to continue restricting cross-border payments by private companies in foreign currency to service external debt obligations.
This means that even with hryvnia liquidity available domestically, the company may face difficulties transferring foreign currency abroad to settle with Eurobond holders.
Fitch notes that Vodafone Ukraine will have sufficient liquidity for operations and debt repayment once the NBU grants permission for foreign currency payments.
What does a CCC- rating mean?
The CCC- rating falls into the speculative category and signals very high credit risk. This does not imply an automatic default, but indicates that the company is vulnerable to adverse financial, economic, or regulatory conditions.
In simple terms, Fitch believes that Vodafone Ukraine has a strong domestic business but faces heightened risk due to upcoming external debt repayments and foreign exchange restrictions.
What is an IDR
IDR, or Issuer Default Rating, is a long-term issuer default rating. It reflects an assessment of the likelihood that a company will be able to meet its financial obligations.
In the case of Vodafone Ukraine, Fitch downgraded both the long-term IDR and the senior unsecured debt rating.
What is RR4
The RR4 recovery rating remained unchanged. The Recovery Rating indicates the portion of funds that creditors could potentially recover in the event of a default or debt restructuring.
An RR4 rating under Fitch’s methodology typically corresponds to the average expected recovery level for creditors.
What supports Vodafone Ukraine’s rating
Despite the downgrade, Fitch emphasizes that Vodafone Ukraine’s position is supported by several key factors.
These include:
- a strong position in the Ukrainian mobile communications market;
- high profitability;
- stable internal cash flow;
- a large subscriber base;
- the importance of the telecommunications sector for the country.
According to Dragon Capital, Vodafone Ukraine is the country’s second-largest mobile operator, with a subscriber base of approximately 15.4 million users in 2025.
Vodafone Ukraine’s Financial Results
As of the end of 2025, Vodafone Ukraine increased its revenue by 14% to UAH 27.8 billion. The company’s net profit rose by 18% to UAH 4.18 billion.
These figures indicate that the company remains profitable on an operational basis. However, Fitch’s rating decision shows that for international creditors, the key risk remains not the current business but the ability to service external debt.
Dividends and Eurobond Redemption
On April 24, 2025, Vodafone Ukraine announced the accrual of dividends to shareholders in the amount of UAH 660.245 million, or approximately $15.9 million at the exchange rate specified in the company’s announcement.
According to NBU restrictions, payments must be made in separate monthly installments in the hryvnia equivalent of €1 million.
Due to the terms of the bond issue, the company must offer Eurobond holders the opportunity to sell securities in an amount equivalent to the dividend payments outside of Ukraine.
Since late May of last year, Vodafone Ukraine has repurchased its own Eurobonds for approximately $24.4 million following nine offers. In early May, the company announced another tender at 98% of par value for $1.17 million.
