Page 48 - UKRRptApr20

“Some of S&P’s forecasted indicators, such as the exchange rate, are already out-dated as the hryvnia has depreciated about 2.7% in the last week to about 26.0 UAH/$, with little prospects to return to the UAH24.5/$mark this year. Also, it might happen that the S&P credit rating and outlook for Ukraine will become out-dated as soon as this week, which could prove decisive in determining the prospects for Ukraine to reach an IMF loan deal,” Alexander Paraschiy of Concorde Capital said in a note.
There is more trouble on the horizon in connection with Kolomoisky and his partners, who are continuing their campaign to extract money and assets from the government.
Ukraine’s Supreme Court was due to hear a complaint about the bailed-in deposits of the Surkis family in Privatbank that used to belong to Kolomoisky until it was nationalised in 2016 after it was discovered he and his partners had looted the bank of some $5.5bn, which they refuse to return. Since Zelenskiy became president Kolomoisky returned to Ukraine and has launched an onslaught of legal cases attempting to recover the bank or at least receive compensation of $2bn. Any return or compensation payment is a red line issue for the IMF and would kill any hope of a deal.
International ratings agency Fitch Ratings has affirmed Ukraine’s international debt rating at B with a Positive outlook​, the agency said on March 6.
The agency considers Ukraine’s inflation and international reserves coverage of imports to be “close to the median of B-rated countries,” while the nation’s state budget deficit and state debt-to-GDP ratio are better than those of its B-rated peers. At the same time, Ukraine’s short-term external financing needs remain high relative to peers, Fitch noted.
The agency’s positive outlook reflects its expectation that “continued engagement with the IMF under a new multi-year programme will help support a sustained reduction in refinancing risks.” Among the key risks for the rating, Fitch listed external financing pressure that may stem from a “failure to agree upon an IMF programme or delays in disbursements from it.” Fitch sees an IMF deal with Ukraine in 1H20 as its baseline scenario.
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.
48​ UKRAINE Country Report​ April 2018 ​ ​www.intellinews.com