Moody's downgrades Ukraine, FIP

Moody's Investors Service said it downgraded Ukraine's long-term issuer and government debt ratings to Ca from Caa3, country ceiling for long-term foreign-currency debt to Caa3 from Caa2 and country ceiling for long-term domestic-currency debt to Caa2 from Caa1. The outlook remains negative.

In a related rating action, Moody's also downgraded the issuer and debt ratings of Financing of Infrastructural Projects (Fininpro) to Ca from Caa3 and maintained the negative outlook. Fininpro's debt is fully and unconditionally guaranteed by the government of Ukraine.

The agency said the key driver of the downgrade is the likelihood of external private creditors incurring substantial losses as a result of the government's plan to restructure the majority of its outstanding eurobonds. Also included in the restructuring is the external debt of state-guaranteed entities and selected other state-owned enterprises and the eurobonds issued by the capital city of Kiev.

The negative outlook reflects Moody's expectation that Ukraine's government and external debt levels will remain very high in spite of the debt restructuring and plans to introduce reforms.

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