Ukraine downgraded by Moody's

Обзор облигаций 26.03.2015 Moody's downgraded Ukraine to Ca from Caa3 because of the negative impact of the sovereign debt restructuring on investors. The principal haircut, the reduction in the coupon rate, and a possible grace period will cause losses for investors. Should they reject the MoF's proposals for restructuring, there could be sovereign default. Despite this, the market did not react to this rating downgrade as current prices have already factored in the risks inherent in the debt restructuring. The MoF likely met with numerous key investors last week in US and this week in Europe to discuss the investors' view on possible steps to meet the EFF target of US$15.3bn of private sector support for Ukraine. Investment implications: Rating agencies have already factored in recent events, as have investors, in their evaluation of Ukraine's debt. Because of this, Moody's decision will have little impact on the market which still anticipates the official proposals from the MoF and quasi-sovereign companies.