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S&P Rates Ukraine $800 Million Eurobond Due 2013 'B'

June 05, 2003 | Cbonds

Standard & Poor's Ratings Services said today it assigned its 'B' senior unsecured debt rating to the Republic of Ukraine's (B/Stable/B) upcoming $800 million Eurobond issue maturing on June 11, 2013.

The ratings on Ukraine are constrained by:

-- A difficult domestic political situation, characterized by weak policy execution resulting from a politically fragmented and indecisive parliament, and the still fragile integrity of the government dominated by President Leonid Kuchma. The new government of Viktor Yanukovich, nominated in early December 2002, has had some legislative successes, but its support base in parliament remains uncertain.

-- A weak economic structure. In particular, the country's large and politically sensitive mining sector and other heavy industries need to be downsized, and the inefficient energy sector restructured, to pave the way for privatization. As a result of the difficult domestic political environment, the politically challenging and controversial privatization program is unlikely to accelerate during the rest of this year.

-- The risk that further delays to the privatization process and persistent administrative difficulties will continue to inhibit foreign direct investment inflows and lead to a rapid increase in the external debt burden.

The ratings on Ukraine are supported by:

-- Macroeconomic stability and a relatively strong export sector. This will help to sustain modest real GDP growth of 3%-4% over the next two years, even if major structural reforms continue to be delayed due to political constraints.

-- Comparatively high international reserves, with about $5 billion held by the National Bank of Ukraine.

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