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S&P Lowers Ukraine's Rating To 'CCC'; Outlook 'Negative'

Standard and Poor's Rating Agency on Friday lowered Ukraine's long-term foreign currency sovereign credit rating to 'CCC' from 'CCC+', citing the deteriorating political situation that poses risk to the government's capability to meet debt services.

The agency, meanwhile, affirmed its short-term foreign currency sovereign rating at 'C', and retained the long-and short-term local currency sovereign credit ratings at 'B-/B'.

Ukraine's political uncertainty raises uncertainty regarding the continued provision of Russian financial support over the course of 2014, and puts the government's capability to meet debt service at increasing risk. The situation has also significantly increased the likelihood of a forced devaluation of the Ukrainian hryvnia.

Justifying the 'Negative' outlook, the agency warned that Ukraine faces the risk of a default if the political and economic situation does not improve significantly. The government has not yet secured sufficient external funding to avoid a selective default or distressed exchange.

S&P warned that the rating could by lowered again if political turmoil further reduced the government's administrative capacity to meet debt service, or if Ukraine did not receive the expected financial support from Russia or elsewhere.

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