Moody's downgrades Ukraine's ratings to 'Caa2'

By Ovunc Kutlu

ANKARA (AA) - Moody's announced Friday that it downgraded Ukraine's foreign and domestic currency long-term issuer and foreign currency senior unsecured debt ratings to 'Caa2' from 'B3.'

The ratings remain on review for further downgrade, the global rating agency said in a statement.

The two-notch downgrade is a result of the intensification of Russia's military operations in Ukraine, it said.

One of the key drivers behind the downgrade was Ukraine's ability and possibly willingness to service its debt. In addition, Ukraine´s economic and fiscal strength is expected to see extensive damage amid its productive capacity.

"Moody's believes Ukraine's buffers and forthcoming substantial international financial support will not be sufficient to fully offset liquidity risks stemming from Ukraine's debt repayment needs, given the large economic and fiscal costs the invasion will inflict on the country," the statement said.

"Moreover, the heavy human toll and the damage to Ukraine's productive capacity that the military invasion will inflict will have a severe impact on Ukraine's economic and fiscal strength, and the military conflict could also disrupt Ukraine´s existing institutions and governance set up," it added.