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21 Feb 2014
Ukraine shaky peace deal reached amid continuing protests, bond auction canceled
FXStreet (Łódź) - Ukraine, which has been submerged in a deep political crisis for the last three months, with violent protests escalating in recent days, saw its sovereign credit rating reduced further by Standard and Poor's to CCC on Friday, with a negative outlook. Moody's meanwhile kept the country's rating at Baa1.
According to the statement released by Standard and Poor's the situation in Ukraine worsened considerably, which “raises uncertainty regarding the continued provision of Russian financial support over the course of 2014, and puts the government’s capability to meet debt service at increasing risk.”
In December Moscow agreed to purchase 15 billion dollars of Ukrainian debt and reduce the price of gas it provides for the country, if Kiev renounces the plans for a political and trade agreement with the European Union. But the bailout deal had been suspended due to the upheaval.
“We consider that the future of the current Ukrainian leadership is now more uncertain than at any time since the protests began in November 2013,” the S&P added.
On Friday Ukraine canceled a planned auction of 2 billion dollars worth of 5-year Eurobonds, which Russia was expected to purchase. So far Moscow had bought 3 billion dollars of the planned 15 billion.
The exacerbation of the conflict in Ukraine with a possibility of a Russian military intervention could affect the financial markets in the entire region, as last week saw currencies weakening in Poland, Hungary, Romania and Russia.
The agreement on ending the crisis reached today in Kiev between Ukrainian President Viktor Yanukovich and Polish and German foreign ministers includes appointing a transitional government, making changes to the constitution which would involve reducing presidential powers and calling new elections by the end of the year. It is not sure however if the demonstrators clashing with the police on the city's central Maidan square will accept the resolution.
According to the statement released by Standard and Poor's the situation in Ukraine worsened considerably, which “raises uncertainty regarding the continued provision of Russian financial support over the course of 2014, and puts the government’s capability to meet debt service at increasing risk.”
In December Moscow agreed to purchase 15 billion dollars of Ukrainian debt and reduce the price of gas it provides for the country, if Kiev renounces the plans for a political and trade agreement with the European Union. But the bailout deal had been suspended due to the upheaval.
“We consider that the future of the current Ukrainian leadership is now more uncertain than at any time since the protests began in November 2013,” the S&P added.
On Friday Ukraine canceled a planned auction of 2 billion dollars worth of 5-year Eurobonds, which Russia was expected to purchase. So far Moscow had bought 3 billion dollars of the planned 15 billion.
The exacerbation of the conflict in Ukraine with a possibility of a Russian military intervention could affect the financial markets in the entire region, as last week saw currencies weakening in Poland, Hungary, Romania and Russia.
The agreement on ending the crisis reached today in Kiev between Ukrainian President Viktor Yanukovich and Polish and German foreign ministers includes appointing a transitional government, making changes to the constitution which would involve reducing presidential powers and calling new elections by the end of the year. It is not sure however if the demonstrators clashing with the police on the city's central Maidan square will accept the resolution.