Moody’s Investors Service has updated Ukraine’s rating from Caa3 to Caa2 and changed the rating outlook from “stable’ to “positive,” the company reported on Aug. 25.
The upgrade was based on two key factors: the cumulative impact of structural reforms, which can improve government debt dynamics, and the significant strengthening of Ukraine’s external position, the company said.
“The positive rating outlook captures the momentum of reforms that, if sustained, could lead to further improvements in Ukraine’s public and external debt sustainability,” an official statement from Moody’s read.
“Such reform momentum would also support Ukraine’s renewed access to global capital markets, which would provide an easier route to refinancing significant external debt payments from 2019 onward.”
The rating upgrade was limited to only one notch due to the heavy external debt-servicing burden that Ukraine will face over the next several years, which will require additional foreign currency funding.
Also, Ukraine’s access to private capital markets could be disrupted by domestic politics and geopolitical tensions, Moody’s said.
