Standard & Poor Ratings Services lowered its outlook on Ukraine’s credit rating, citing concern that the country’s cooperation with the International Monetary Fund may be stalled.
The outlook was cut to stable from positive while the service affirmed Ukraine’s CCC+/C long and short term foreign currency sovereign credit ratings, the B-/C long and short term local currency ratings.
Mr Frank Gill S&P credit analyst in the statement that “The outlook revision reflects renewed uncertainty regarding the implementation of the country’s IMF arrangement ahead of the January 17th 2010 presidential elections.”
Ukraine is relying on a USD 16.4 billion loan from the IMF approved in November 2008 to avoid a default after the global recession and credit crisis undermined demand for exports such as steel and hammered the country’s banking industry. The government is hoping to draw a USD 3.4 billion tranche next month though the IMF has told Ukraine it must push through tougher budget cuts before it can receive the funds.
The IMF program was suspended for three months this year because of government disputes over state spending.
According to JPMorgan Chase & Co EMBI+ Indexes Ukraine borrowing costs increased the most in three weeks after the outlook was lowered. The extra yield investors demand to own the country international bonds instead of US. Treasuries soared 46 basis points to 9.74 percentage points the biggest increase since October 9th.
(Sourced from Bloomberg)
