Page 48 - UKRRptMar21

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
With the Ukraine’s $5bn Stand By Agreement (SBA) with the International Monetary Fund (IMF)​ i​ n limbo​, the Ministry of Finance has turned to the domestic bond market to build up reserves ​ahead of a year of heavy debt redemptions.
Yields on local hryvnia debt have been hiked to between 10% and 12% to entice investors back into the market after a sell off in 2020, due to multiple shocks. And foreign purchases of Ukrainian government bonds are returning to their peak levels of late 2019, reports Dragon Capital.
Over the last month, foreign purchases totalled $526mn, “close to peak monthly inflows of $560-610m in September and December 2019,” Dragon wrote as cited by​ ​UBN.​
“Recent appreciation pressure on the hryvnia (+1.4% w/w) is likely to support interest in local bonds. We expect yields on medium-term hryvnia debt to remain close to current levels in the coming months unless an upsurge in foreign demand drives them lower.” The government is due to pay off some $16bn of debt this year with a peak payment of $11bn in September. Economist worry that without a working IMF programme the government will not be able to meet its obligations.
With demand strong for Ukrainian government bonds, the Finance Ministry depressed yields on all five hryvnia bonds sold at February 17 auction, the Ministry reported. ​With yields dropping from six to 44 basis points, the final range was 9.15% for 3-month bonds to 12.05% for 3-year
48​ UKRAINE Country Report​ March 2021 ​ ​www.intellinews.com