Ukraine in Arabic | Ukraine can default next year, Moody's says
KYIV/Ukraine in Arabic/ Ukraine will probably default next year due to the repayment of a controversial $3 billion bond held by Russia, according to Moody's rating agency, who expect that at the beginning of next year Kiev's debt would exceed the limit that would allow Moscow to demand immediate repayment.
The rating agency notes that Ukraine's deep 7.5% economic contraction and wilting currency is likely to push its debt-to-GDP ratio up to 66% this year - above the maximum 60% ratio stipulated in the clauses of the Russian Eurobond that the last Kyiv government sold to Moscow before the revolution.
"When Ukraine's debt-to-GDP ratio official breaches that level - possibly as early as January 29, when it is slated to release provisional fourth-quarter economic data - Moscow can ask for immediate payment acceleration," the report says.
The assumption has been that the IMF and Kyiv's other western backers will bite their teeth and stump up the money for repayment, but Moody's reckons this will not avert a wider default.
Moody's report implies that Ukraine will almost inevitably default early next year - unless Moscow unexpectedly decides to give the country a reprieve.
