Anton Tabakh, senior analyst at Troika Dialog
S&P this morning raised Ukraine’s rating from CCC+ to B-, citing a decline in political risks. The agency believes that the formation of a new government coalition will create the basis for improved political coordination and the revival of relations with the IMF.
Possible positive factors include the approval of a new budget by the coalition, while the provision to Ukraine of the next IMF tranche as part of its $16.4bn credit line will be an important factor for heightened trust in the country’s financial and political stability.
In our view, we may see positive rating moves from other agencies over the next few weeks, and the trigger for the next wave of upgrades could be the completion of the budget process and the unfreezing of IMF funds in May-June.
Today’s decision is clearly positive for Ukrainian Sovereign and quasi-Sovereign bonds.
