Moody's downgrades Ukraine to Caa2

Moody's Investors Service said it downgraded Ukraine's government bond rating to Caa2 from Caa1 and assigned a negative outlook.

Moody's said the decision to downgrade Ukraine's sovereign rating is driven by the following three factors:

• The escalation of social and political tensions in the country, and the associated risk of a severe administrative crisis and/or prolonged political uncertainty;

• The increased risk of a sharp rise in external liquidity needs due to rising demand for foreign currency by the Ukrainian population amid the political crisis and the recent weakening of the domestic currency; and

• Heightened uncertainty regarding the predictability of the external liquidity support from Russia.

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