| S&P Upgrades Ukraine's Ratings To B-/C From CCC+/C |
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12/03/2010 13:42 (701 Day 17:40 minutes ago) | ||||
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The FINANCIAL -- International ratings agency Standard & Poor's upgraded foreign-currency sovereign ratings to B-/C from CCC+/C, reads a press release circulated by the agency.
The agency also increased Ukraine 's local-currency rankings to B/B from B-/C.
The rating company's outlook on Ukraine is positive.
The agency notes, formation of a fresh coalition and government to be aground for political stabilisation and resuming cooperation with the International Monetary Fund.
"We believe that today's [March 11] formation of a new governing coalition and cabinet in Ukraine has paved the way for better policy coordination and a renewal of relations with the IMF," Standard & Poor's said in the press release.
Standard & Poor's also supposes that the provision of the next tranche under the USD 16.4 billion IMF standby arrangement will be essential to improve confidence in Ukraine 's monetary and economic stability, to finance a component of this year's budget, and to help improve the finances of Ukraine 's pension system and state-owned joint-stock company Naftohaz Ukrainy.
The positive outlook reflects the potential for the country's new government to create a more sustainable budgetary position.
"We raised the ratings to reflect the greater likelihood of stronger policy coordination to restore economic and, in particular, fiscal sustainability. We expect that the new government will draft and submit a 2010 budget to the Rada by April 11. Although parts of Ukraine 's standby arrangement with the IMF might require revision, resumed fund disbursements would instill greater confidence in Ukraine 's political and macroeconomic stability," the press release reads.
The agency believes that greater investor confidence in turn would also improve the financial account of Ukraine 's balance of payments via higher foreign direct investment and a higher rollover rate of external debt.
The positive outlook reflects the potential for the new government to improve coordination with the presidential administration to achieve a more sustainable budgetary position and to continue to support the stability of the badly hit financial sector and the real economy.
It also reflects the possibility that the latest round of elections will lead to a longer political cycle and a lower turnover of decision makers than in the last six years, reducing the risks of a return to politically driven fiscal policymaking.
The positive outlook indicates upward pressure on the ratings building this year and next if fiscal and external pressures abate.
As Ukrainian News earlier reported, Standard & Poor's in October 2009 worsened outlook for Ukraine 's ratings to Stable from Positive.
At the same time, the agency affirmed the 'CCC+/C' long- and short-term foreign currency sovereign credit ratings, the 'B-/C' long- and short-term local currency ratings, and the 'uaBBB' Ukraine national scale ratings.
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