Credit-Rating: Rapid devaluation of the national currency may derail Ukraine’s economy in the nearest future - 17 December 2010

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18:30 Credit-Rating: Rapid devaluation of the national currency may derail Ukraine’s economy in the nearest future
Credit-Rating subscribes to the opinion that more than rapid decline in USD/UAH exchange rate may prompt a number of defaults of Ukrainian companies and banks in the nearest future. The highest exposed are systemic banks and large companies, which have raised large foreign currency-denominated loans. Today the majority of borrowers do not have foreign currency gains in the volumes necessary for simultaneous servicing their debt obligations without harming their businesses. Under such condition there is high probability that even creditworthy obligors will refuse to make payments or try to restructure their debts even under availability of free funds. It is possible that number of Ukrainian borrowers will refuse to serve the currency loans which have risen in price in two times. They are likely to spoil their reputation trying to sustain their businesses and counting on possibility for negotiating their debts with lenders. In Credit-Rating’s view, such situation will have extremely adverse impact on Ukraine’s banking system, and on budget-forming sectors, i.e. machine-building, metallurgy, retail. In case the authorities, primarily the National Bank of Ukraine, the Parliament and the Government further linger in carrying out anti-crisis actions, a number of defaults may occur in current year. In January-February 2009 the defaults in payments for loans and debt obligations may have regular nature that can lead to derailment of Ukraine's economy.
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