Ukraine's falling redit ratings indicates that its economy is one step away from irreversible downfall, according to deputy head of the ruling Regions Party's faction and former PM Sergiy Tigipko.
“The downgrading of Ukraine’s rating to ‘CCC’ by Fitch is a yellow card for our economy. Aggressive anti-crisis measures are needed, and a new, effective, and qualified government is needed right now,” the politician wrote in his blog on Facebook.
“Tomorrow might be too late,” Tigipko added.
As reported, leading international rating agencies started downgrading Ukraine’s ratings in the autumn 2013. The first one was Moody’s Investors Service, which downgraded Ukraine’s government bond rating to ‘Caa1’ from ‘B3’ and placed the rating on review for possible further downgrade. Debt obligations with rating ‘Caa’, according to the agency’s scale, are considered to be of very poor quality and are subjects to very high credit risk.
Russia’s financial aid in December held up the process, however, but another aggravation of the political situation, leading to PM Mykola Azarov’s resignation on Jan. 28, made the ratings drop again.
On Jan. 28, Standard & Poor’s lowered Ukraine’s sovereign rating to ‘CCC+’ from ‘B-‘, also changing its outlook to ‘negative’ from ‘stable.’
Then Moody’s downgraded the rating of Ukraine’s euro bonds to ‘Саа2’ from ‘Саа1’ and conferred it a negative outlook.
Finally, Fitch Ratings on Feb. 7, 2014, downgraded Ukraine’s Long-term foreign currency Issuer Default Rating (IDR) to ‘CCC’ from ‘B-‘, and affirmed the Long-term local currency IDR at ‘B-‘. The intensification of political and economic stress makes default on government debt probable. Ukraine is apparently a few steps away from the point of default. Currently Jamaica and Gambia have the same ratings.
After Azarov resigned, first Deputy PM Serhiy Arbuzov temporarily leads the government. Three options for the new government are being discussed: pro-presidential, a coalition and a so-called non-political government.
