Moody’s downgrades Ukraine’s sovereign credit rating.

Monday, May 23, 2022
Moody’s downgrades Ukraine’s sovereign credit rating.

 The Moody’s rating agency downgraded Ukraine’s long-term credit rating from Caa2 to Caa3 and negatively changed the outlook. The downgrade is due to increased risks in servicing Ukraine’s public debt because of Russia’s invasion and active hostilities from Russia’s invasion lasting longer than Moody’s predicted duration. The agency said that all of these factors increase the likelihood of debt restructuring. Although Ukraine currently receives assistance in the form of significant amounts of international financial support, which helps mitigate immediate liquidity risks, in the medium term, this will lead to a substantial increase in public debt. Concerns about the possibility of servicing such debt in the future may hamper Ukraine’s continued access to financing necessary to service its commercial debt. The continuation of the war will keep the need for funding at a very high level for a long time and thus will lead to a further increase in the debt burden.

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