Page 46 - UKRRptFeb20

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.
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 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
Ukraine’s domestic bond market was off to a strong start in 2020 ​as heavy bidding at the weekly auction on January 22 depressed yields to 10%.
A year ago Ukraine bonds were yielding 19%. The Ministry of Finance continues to squeeze bonds by limiting supply to push down yields further and will introduce new 7-year bonds in January.
With foreign investor interest strong in Ukraine’s government debt, the share of government hryvnia-denominated debt increased last year from 33% to 41%. Yields on government hryvnia bonds fell sharply: by 7.22 percentage points to 11.78% for three-month government bonds and by 7.08 percentage points to 11.42% for 1-year government bonds by December. The weighted average term of government hryvnia debt bonds increased: from nine months in 2018 to two years in 2019.
There was heavy bidding at the weekly auction for hryvnia bonds on January 22 where demand was double supply, the Finance Ministry reports. The sale netted the dollar equivalent of $263mn, 5% more than the auction the week before. Average weighted yields were: 3-year hryvnia bonds down 237 basis points to 10.01%; 1-year bonds down 14 basis points to 10.04%; and 6-month bonds down 172 basis points to 10.03%, reports UBN.
46​ UKRAINE Country Report​ February 2020 ​ ​www.intellinews.com