Page 52 - UKRRptOct19

Fitch expects further improvements in creditworthiness," the rating agency said in a statement on September 6.
President Volodymyr Zelenskiy's strong popular support and his party's control of government and parliament provide the government with a uniquely strong position to move ahead with its "reform-minded policy agenda".
The recently formed government ​under newly appointed Prime Minister Oleksiy Honcharuk​ includes technocratic, pro-Western and reform-minded ministers. Key economic policy makers such as Minister of Finance Oksana Markarova remain in their positions, supporting the continuity of policies underpinning reduced macroeconomic imbalances and improved stability.
The new PM intends to negotiate ​a new and longer programme with the International Monetary Fund (IMF)​, Fitch added. "The high likelihood of continued IMF engagement will facilitate access to official and market financing to meet large sovereign debt repayments in 2020-2021, and serve as an anchor for policies and reforms that could potentially lift growth prospects."
Prudent fiscal management, stable growth, declining interest rates and moderate exchange rate depreciation pressure will support continued government debt reduction, the rating agency underlined.
Fitch expects government debt to decline to 47.9% of GDP (55.8% including guarantees) by end-2019, down almost 20pp from the peak of 69.2% (80.9% including guarantees) in 2016 and below the current 57.5% 'B' median, and reach 44.4% by 2021. Government debt dynamics are highly exposed to currency risk as 67% is foreign currency denominated, but greater non-resident participation in the local bond market will help increase the share of local currency debt and extend maturities
Fitch Ratings raised the long-term issuer default rating of Kernel on September 29, from B + to BB-​, with a stable outlook. Kernel, the world’s largest sunflower producer, now has a rating two levels higher than the sovereign. In June, Kernel completed its fiscal year with a net profit of $189mn -- 3.6 times more than in the previous fiscal year. Revenue increased by 66% - to $4bn, and EBITDA - by 55%, to $346mn.
S&P Global Ratings affirmed the long-term credit rating of Ukrainian sunflower oil producer and grain trader Kernel at B with a Stable outlook on September 30. It also assigned a B rating to the company's planned Eurobond issue. The company’s rating affirmation was based on its stable operating performance during FY2019 and was in line with agency’s base case. Kernel will have executed large capital expenditures during the next 12 months, in the agency's view. And Kernel’s FOCF will remain negative (about $160-180mn) in FY2020, while its FOCF will return to positive values by the end of FY2021, the agency said. Also, S&P anticipates that Kernel’s adjusted debt to EBITDA ratio will be close to 4.0x in FY2020. The agency said it is unlikely to consider a rating upgrade during the next 12 months, unless the company’s FOCF returns to positive and adjusted debt to EBITDA ratio will be closer to 3.0x. “Unlike Fitch, which recently upgraded Kernel’s rating to BB- (two notches above sovereign level), S&P decided to keep Kernel’s rating unchanged this time, even after it upgraded its Ukraine sovereign rating to B. In this way, Kernel’s S&P rating, which was above sovereign until last week, was made equal to it. While this “effective downgrade” leaves less arguments for KERPW bonds to trade inside Ukraine’s sovereign curve, we remain bullish on its bonds,” Andriy Perederey of Concorde Capital said in a note.
Moody’s rates Ukraine at Caa1​ with stable outlook on its foreign currency debt. The local debt is also rated at Caa1. Moody’s last upgraded Ukraine from Caa2 (Positive) in August 2017 as the country emerged from an economic meltdown that year. The lowest rating the country had was Ca (Negative) in March 2015 in the wake of the Euromaidan protests that ousted president
52​ UKRAINE Country Report​ October 2019 ​ ​www.intellinews.com