Ukraine Again Downgraded

The agency justifies its decision by last September's technical default (this is how Moody's Investors Service characterized the "voluntary conversion" of domestic loan bonds). But Ukrainian bankers also agree with the international agency. "Now it is already obvious that the West is closed for our bonds," president of the Ukrainian Bankers' Association Oleksandr Suhoniako told The Day. "And our situation is being further complicated because domestic investors, i.e., banks, refuse to solve the government's debt problems within the Ministry of Finance - National Bank - banks triangle.

Moody's also does not expect our domestic situation to improve, referring to a slow pace of structural reforms and the coming presidential elections. The agency has already told the Western public it would not be surprised if Ukraine announced a default on foreign liabilities as well.

PS. Today's financial situation in Ukraine is as follows: if the National Bank (with yearend reserves of $685.5 million in hard currency) makes full payment of February foreign liabilities, experts think NBU liquid currency reserves will drop to a critical level of $300 million.