Standard & Poor’s rating agency has raised its long-term issuer credit rating on the Ukrainian capital city of Kyiv and its issue ratings on Kyiv’s debt to ‘CCC’ from ‘CC,’ the agency’s press service has reported.
“The city of Kyiv repaid its Ukrainian hryvnia (UAH) 1.125 billion domestic bond series B on October 8, 2014, instead of restructuring it as previously announced. We think Kyiv’s course of action is coordinated with and supported by the central government of Ukraine…. For this reason, we are raising our rating on Kyiv to ‘CCC’ from ‘CC’ and removing it from CreditWatch negative,” reads the report.
S&P believes that although Kyiv will face high debt service obligations in 2015-2016, including repayment of $550 million in Eurobonds, it will similarly benefit from central government support.
In its 2014-2016 forecast period, S&P expects only modest tax revenue growth, fuelled mostly by inflation. It also thinks that city will likely slow its investment program in real terms and post deficits after capital accounts of about 5% of total revenues in 2014-2016.
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