Moody’s on Dec 21 upgraded Ukraine’s bond ratings to Caa1 from Caa2 and changed the outlook to stable from positive. Moody’s also raised the country ceiling for FX bonds, as well as hryvnia debt and deposits to B3 from Caa1, and for FX deposits to Caa2 from Caa3. The upgrade was prompted by the new USD3.9bn stand-by arrangement reached with the IMF, recently adopted reforms to reduce corruption, and improvement in resilience to Russia. At the same time, Ukraine heavily depends on IMF support ‘for funding as well as for reform impetus’, said Moody’s. Ukraine is also exposed to risks stemming from geopolitical confrontation and political transition ahead of next year’s elections.
The sovereign rating assigned by Moody’s had been unchanged since August 2017, when it was upgraded by one notch. Last month, Moody’s upgraded the rating of Kiev city to Caa2 to Caa3, and the outlook remained positive. In October, Fitch affirmed Ukraine’s long-term FX IDR at B- with a stable outlook, while S&P affirmed its B-/B sovereign rating, and the outlook was also stable.