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Standard & Poor’s Ratings Services has assigned its ‘B+’ long-term senior unsecured debt rating to Ukraine’s (B+/Stable/B) US$500mn floating rate notes due August 2009.
“The debt rating is the same as Ukraine’s sovereign credit rating, which is supported by the country’s continued improvement in external liquidity and government debt levels, together with its recent robust economic performance and its growth potential,” saysd Standard & Poor’s credit analyst Helena Hessel.
The IMF’s approval of its 12-month stand-by arrangement for Ukraine in March 2004, following almost two years of discussion, is also an important factor supporting the ratings on the sovereign.
The National Bank of Ukraine’s foreign exchange reserves increased to almost US$9bn by the end of June 2004, up from less than US$7bn at year-end 2003. As a result, estimated gross external financing requirements (current account balance plus amortisation of long-term debt and short-term debt) to reserves should decline to 142% at year-end 2004, down from 176% at year-end 2003, with further improvement expected in 2005. Macroeconomic stability and the economy’s incipient reforms have supported better investment opportunities and improved export potential. This has strengthened the economic base and led to significantly stronger-than-expected economic growth in 2003 (9.4%) and so far in 2004.
“Although the significant political uncertainty connected with the upcoming October 2004 presidential elections has not lessened, the strengthened external liquidity and economic structure, together with a lower government debt burden, counterbalance the political risk to a greater extent than in 2003,” adds Hessel.
“We do not expect the elections to worsen relations with the international community or obstruct access to external financing,” Hessel concludes. “Further enhancement of creditworthiness is predicated on significant improvement in the political situation.”