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Ukraine’s credit ratings have been improving but the country is still rated junk by the three main agencies.
Moody’s rates Ukraine at Caa1​ with stable outlook on its foreign currency debt. The local debt is also rated at Caa1. Although analysts were expecting Moody's Investors Service to upgrade Ukraine’s sovereign ratings in May, given the current economic turmoil the agency decided to skip the scheduled review and left Ukraine’s ratings as they were for the meantime at Caa1 with positive outlook – still considerably lower than B/stable from Fitch and S&P.
The lowest rating the country had was Ca (Negative) in March 2015 in the wake of the Euromaidan protests that ousted president Viktor Yanukovych. The highest the country has scored was B1 (positive) in August 2008 as the entire region boomed before the global financial crisis struck that autumn.
Fitch rates Ukraine at B-​ on its foreign currency debt with no outlook indicated. The local debt is also rated at B- (none).
Fitch has become more cautious on Ukraine having removed its positive outlook call in December 2018. But the ratings have general recovered from Fitch “restricted default” rating in October 2015, following the Maidan events. The highest rating the country has had from Fitch was a BB- (positive) first awarded in May 2005 and again in October 2006, during a year-long investment frenzy when foreign banks bought up banks in the country believing the country was about to take off.
Standard & Poor’s (S&P) rates both Ukraine’s foreign and local debt at B-
with stable outlook.
S&P last upgraded Ukraine’s rating from Caa2 (positive) in August 2017. The rating nadir was Ca (negative) awarded in March 2015 following the Maidan events. Its zenith was B1 (positive) awarded in August 2008 at the apex of the region-wide boom.
8.5 ​Fixed income
There was a noticeable sell off on Ukraine’s domestic bond market after
Emerging Markets (EMs) were hit by a wave of selling at the end of February on the back of growing concerns over oil prices and the appearance of the coronavirus (COVID-19) in Asia.
The bond market hit its peak on St Valentine’s Day with a total of UAH809,435mn ($30bn) worth of bonds outstanding, of which foreign investors owned 15.7% -- both all time high records.
As of May 28 the total outstanding amount of bonds was up to UAH883,045mn, but the foreign share of that was down to 11.9%. Given the steady decline of the foreign holdings since the peak in February, bond traders look like they will continue to gradually reduce their exposure in at least the short-term. So far this year bond investors have already sold UAH21,787mn ($808mn) worth of bonds over the last three and half months.
Of all the reforms that have been made in since the Euromaidan protests in 2014, probably the most significant has been to​ ​hook Ukraine’s domestic debt market up to Clearstream in March 2019​. That allowed Ukraine to tap a new and enormous pool of funds to finance its transformation and foreign investors poured some $5bn into the market last year. On the flip side, international bond traders were happy to be able tap the high yielding Ukrainian fix income
54​ UKRAINE Country Report​ June 2020 ​ ​www.intellinews.com