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Standard & Poor’s Ratings Services has assigned its ‘B’ senior unsecured debt rating to the Republic of Ukraine ‘s (B/Stable/B) upcoming US$800mn 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 privatisation. As a result of the difficult domestic political environment, the politically challenging and controversial privatisation programme is unlikely to accelerate during the rest of this year.


  • The risk that further delays to the privatisation 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 US$5bn held by the National Bank of Ukraine .