S&P lowers Ukraine's local-currency rating to B+ from BB-.

By bne IntelliNews September 14, 2011
The Standard & Poor's Ratings Services has affirmed Ukraines long-term foreign-currency sovereign rating at B+ and lowered the long-term local-currency sovereign rating to B+ from BB-, the agency's press service said in a statement. At the same time, S&P affirmed short-term local and foreign currency ratings at B. The outlook on the ratings is Stable. Additionally, the long-term Ukraine national scale rating was affirmed at uaAA-. According to the statement made by the agency, the transfer and convertibility assessment was maintained at B+, in line with the foreign currency rating, and the recovery rating on the unsecured foreign currency debt was affirmed at 4, indicating our expectation of 30%-50% recovery in the event of a default. The S&P noted that the ratings on Ukraine are constrained by continuous double-digit inflation, unsustainably high pension spending, political constraints to fiscal consolidation, and a significantly leveraged financial sector with considerable nonperforming loans (NPLs). At the same time the agency noted a large commodity endowment and strong growth potential, particularly if the improved fiscal results can be maintained and even strengthened without the crutch of high inflation boosting nominal GDP and revenues.
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