Moody’s upgrades Ukraine to Caa3

Moody's Investors Service said it upgraded Ukraine's government issuer rating to Caa3 from Ca.

The outlook was changed to stable from negative.

The nine new bonds created in Ukraine's debt exchange operation were rated Caa3, and the ratings of the 13 bonds they replaced – including the three bonds issued by a government-guaranteed entity called Financing of Infrastructural Projects (Fininpro) in 2011 – were withdrawn.

The issuer rating of Fininpro was also raised to Caa3 from Ca, in line with the government's rating.

Moody’s said the upgrade is based on the following key drivers: (a) settlement of the restructuring of $15 billion in privately-held Eurobonds issued or guaranteed by the government, which eases Ukraine's debt-service requirements and strengthens the country's external liquidity; and (b) progress in political and economic reform under the auspices of the IMF-led program, supporting a rebalancing of the economy and a meaningful reduction in public and external financial deficits.

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