S&P, Fitch see downward risks for Ukraine's B rating on background of falling Fx reserves.

By bne IntelliNews September 25, 2013

Standard & Poor's and Fitch both voiced its concern regarding Ukraine's falling foreign exchange reserves and its ability to refinance its debt.

Earlier, this week, Moody's Investors Service has downgraded Ukraine's government bond rating to Caa1 from B3 and placed the rating on review for downgrade. Moody's explained the rating action with the rating agency's concerns over Ukraine's external liquidity position. The agency also noted that Ukraine’s foreign-exchange reserves are already at a very low level and pressure on reserves is likely to rise due to increased domestic demand for foreign currency in the autumn and significant foreign-currency-denominated debt repayments until end-2014.

The S&P analyst, Trevor Cullinan, told Reuters that the key issue for the agency remains whether or not the government can improve its strategy for securing foreign currency.

The Moody’s also points to increased downside risk related to future negotiations with the International Monetary Fund, which has negative implications for external liquidity and progress on domestic economic reform. It also points to political and economic risks due to what the rating agency sees as deteriorating relations with Russia on the ground of expectations that Ukraine will sign an Association Agreement with the European Union in November 2013.

In August, the Fx/gold reserves of the National Bank of Ukraine (NBU) declined by 4.7% m/m to USD 21,651mn, the lowest level since November 2006. The bank's foreign reserves amounted to USD 19.8bn as of August 31, its IMF reserve position amounted to USD 0.03mn, its special drawing rights USD 15.21mn, and its gold reserves USD 1.9bn. Since the beginning of 2013, NBU’s reserves decreased by 11.8% to USD 21.7bn.

Earlier this year, PM Mykola Azarov said that Ukraine will not be spending its foregn reserves on supporting national currency in 2013. According to various experts, Ukraine’s international reserves, that hardly cover 3-month exports, will fall to USD 20.5bn-20.7bn by the end of the year, due to widening of the foreign trade deficit and repayment of external debts.

Related Articles

Ukraine central bank slams PwC over PrivatBank audit

The National Bank of Ukraine (NBU) has accused PricewaterhouseCoopers, PrivatBank's auditing firm, of providing an inadequate evaluation of collateral under loans provided by the çountry's ... more

Ukraine's Odesa Port Plant suspends operations after privatisation tender fails

Ukraine's Odesa Port Plant (OPP) will suspend operations due to unfavourable economic conditions, including overpriced natural gas supplied by national gas monopoly Naftogaz, the fertiliser company ... more

Privat investigations: PrivatBank lending practices threaten Ukraine’s financial stability

The problems at PrivatBank, co-owned by oligarchs Igor Kolomoisky and Hennady Boholyubov, have forced the Ukrainian government to nationalise the country’s largest commercial bank, putting an ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss