Ratings agency Standard & Poor's on Friday downgraded its assessment of Ukraine's creditworthiness deeper into junk status due to concerns about the government's rising external financing needs. The downgrade is the latest blow to the government of President Viktor Yanukovych at a time of increasing economic difficulty and tense relations with giant neighbour Russia over Kiev's EU integration ambitions.
The agency lowered its long-term foreign and local currency sovereign credit ratings on Ukraine to 'B-' from 'B', with a negative outlook, it said in a statement. "The downgrade reflects our view that the government's strategy is increasingly unlikely to secure sufficient foreign currency to meet its elevated external financing needs," S&P said. "The ratings are constrained by our view of political uncertainty, financial sector stress, and weak external liquidity," it said, adding that Ukraine's government debt was still relatively low and the economy fairly diversified. According to Standard & Poor's ratings definitions, a 'B' rating means that adverse conditions can impair a government's capacity to meet its financial commitments.