Fitch confirmed ratings of Ukraine at the B

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The international rating agency Fitch Ratings confirmed the long-term ratings of a default of the issuer ("RDI") of Ukraine in foreign and national currency at the B level with the "negative" forecast. About it it is spoken in the message of Fitch transferred to agency of the UNIAN.

According to the message, short-term RDE in foreign currency and a rating of a country ceiling are confirmed at the B level.

"There is a serious risk of non-performance by Ukraine of conditions of the program of the IMF at the time of the following check of their observance in November, mainly from - for further weakening of discipline of pursued policy, and the delay with granting the IMF of the next tranche of the credit is as a result possible, - the director in analytical group Fitch on sovereign ratings Andrew KOHUN notes. - If the program is suspended, it can undermine fragile trust to national currency and a banking system that, in turn, can strengthen pressure towards fall of ratings".

In the message also it is specified that the government of Ukraine actually departed from obligations in respect of the pursued policy, taken at the time of the second check of observance of conditions of the program of the IMF in July, 2009, including on increase of retail tariffs for gas for the purpose of budget deficit reduction to 6% of gross domestic product in 2009, or 8,6% taking into account deficiency of the state energy company NAK Naftogaz Ukrainy ("RD" rating (a limited default) / Rating Watch "Developing"). According to Fitch forecasts, the budget deficit will make 8,5%, or 11,1% taking into account "Naftogaz". Correcting actions are improbable before carrying out presidential election in 2010. If means from the IMF and other international financial organizations aren't provided, Ukraine can face difficulties with financing of deficiency of such scale without use in more considerable extent of issue financing. Actually printing of money, in turn, will increase risks for stability of an exchange rate and economy.

The rating agency notes that the macroeconomic policy of Ukraine is inconsistent as the authorities intend to protect an exchange rate, without resorting thus to necessary toughening налогово - the budgetary policy. Gross official reserves of Ukraine in 28,1 bln. dollars for the end of September, 2009 were reduced by 11% concerning level for the end of 2008 in 31,5 bln. dollars, despite 6,1 bln. dollars received within a year on the program of the IMF. The central bank spent 9,5 bln. dollars during currency interventions in January - September, 2009 of Fitch is concern by that in case of a delay of the following tranche from the IMF the fragile trust to national currency can be undermined, to hryvnia, and the next round of financial instability can follow.

According to Fitch, further sharp decrease in a course to hryvnia would strengthen pressure upon the banking system of the country mentioned by crisis. The indicator of the problem credits reached 30% for the end of June, 2009 according to IMF data, and on it made essential influence gross domestic product reduction on 18% in the 2nd quarter 2009 (concerning the same period of previous year) and devaluation to hryvnia for 60% from the moment of approach of crisis in September, 2008 (affected those 54% of the credits which are nominated in foreign currency). Signs of renewal of a stress in a financial system, such as sharp decrease in a course to hryvnia and/or outflow of deposits, would strengthen pressure upon ratings towards fall.

At the same time Fitch notes that, despite such difficult situation, Ukraine extinguished the state eurobonds with coming maturity dates on 1,2 bln. dollars in August and September, 2009 that testifies to readiness to service the debts. Ukraine currently has a break in approach of maturity dates on eurobonds till December, 2010 when there steps term on the bonds nominated in yens, on the sum about 0,4 bln. dollars. The global and regional macroeconomic forecast shows some signs of improvement that supports prospects for export branches of Ukraine. Prolongation indicators on external debt of the private sector are at rather high level approximately in 89% for banks and 80% for the companies. Ratings of Ukraine on - former are supported at the expense of a low gross cumulative public debt. The increase in the relation of a debt to gross domestic product to 23% by the end of 2009 is predicted. in comparison with 14% for the end of 2008., however this level remains below predicted median value for the countries with a rating in the category "B" (29% in 2009). Ratings of Ukraine also are supported on - former by rather high average income per capita for the rating category "B". So, for 2009 the income per capita of 2 400 dollars is predicted at a median indicator for the rating category "B" in 1 800 dollars though indicators of the World bank on business climate are at lower level, than a median indicator at comparable sovereign issuers.


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