S&P lowers Ukraine to CC

Standard & Poor's said it lowered its long-term foreign currency sovereign credit rating on Ukraine to CC from CCC-.

At the same time, the agency affirmed the long-term local currency sovereign credit ratings at CCC+, the short-term foreign and local currency sovereign credit ratings at C and the national scale rating at uaB+.

The outlook is negative.

S&P said the downgrade reflects its expectation that a default on foreign currency central government debt is a virtual certainty.

The Ukrainian government has announced its intention to restructure its foreign currency commercial (Eurobonds) debt stock. The government intends to conclude soon-to-begin debt restructuring talks with external commercial creditors by the end of May.

The government’s objective is to cover $15.3 billion in external financing needs as part of a revised $40 billion financing plan approved by the IMF.

Under its criteria, S&P expects it would classify an exchange offer or similar restructuring of Ukraine’s foreign currency debt as tantamount to default.

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