S&P cuts Ukraine's rating two notches

Yesterday Standard & Poor’s downgraded Ukraine’s sovereign long-term foreign currency credit rating from ‘B’ down two notches to ‘CCC+’, seven levels below investment grade. S&P cited political turmoil that poses risks to Ukraine’s USD 16.4 bln IMF loan agreement. S&P maintained a negative outlook on the rating. Bloomberg, which cited CMA Datavision, said that Ukraine’s credit default swaps cost more than for any other government debt worldwide and imply a 69.6% chance of a Ukraine default in two years and 91.8% chance in five years. S&P began the process of officially lowering the ratings of Ukrainian issuers in line with the new sovereign rating – yesterday it cut municipal entities Kyiv, Lviv, Dnipropetrovsk, Ivano-Frankivsk, Luhansk, Odesa and Crimea, as well as banks Alfa-Bank Ukraine, Kredobank and Ukrsotsbank, down to ‘CCC+’. S&P affirmed Unex Bank’s long-term foreign currency rating at ‘CCC+’. The outlook on all of those ratings remains negative.