S&P: Sound financials boost Ukrainian local governments

Standard & Poor's said in a report that Ukrainian local and regional governments continue to post sound financial performance and exhibit low debt levels.

These subsovereigns also have growing economies, although this growth remains volatile, the agency said.

"In the next two to three years, ratings on Ukrainian LRGs will most likely remain in the speculative-grade category," said S&P credit analyst Boris Kopeykin.

"Due to the centralized structure of the Ukrainian intergovernmental system, the pace and direction of future developments in LRG creditworthiness will depend heavily on Ukraine country risks in general, including the macroeconomic environment, fiscal, legal and structural issues. The LRGs' credit quality will also be influenced by the evolution of the intergovernmental system."

In general, the financial performance of rated Ukrainian LRGs remains strong, with, on average, double-digit operating surpluses reported in the past couple of years, the report added.

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