The international rating agency, which predicted the default of Ukrzaliznytsia, says that the NBU will not be able to support Ukrainian banks
An international rating agency, which recently predicted a technical default for Ukrzaliznytsia, claims that the National Bank of Ukraine has nearly exhausted its ability to lend to the country's banks to keep them afloat, reports RBC-Ukraine.
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The National Bank of Ukraine (NBU) will continue to provide support to Ukrainian banks through loans and credits, but its ability to support the system is diminishing. This was reported by the press service of the international rating agency Standard & Poor's (S&P). In the past few months alone, the NBU has lent billions of hryvnias to PrivatBank alone.
Ukraine's Ministry of Finance is currently negotiating a write-off of the enormous public debt due in 2015. The talks reached an impasse on Tuesday, Bloomberg reports.
S&P said in a statement that the agency considers the possibility of providing state support to Ukrainian banks to service and repay their foreign currency debt uncertain. This is all due to the limited foreign exchange reserves of commercial debt on Eurobonds.
Moreover, currency control mechanisms and restrictions on the withdrawal of retail deposits in national and foreign currencies, introduced by the NBU over a year ago, prevent the agency from assigning a "selective default" (SD) rating to Ukrainian banks. As a reminder, on April 10 of this year, S&P downgraded Ukraine's long-term sovereign credit rating for foreign currency obligations from "CCC-" to "CC." Similarly, just a week before Ukrzaliznytsia's technical default, announced on May 12 , S&P predicted its default.
This time, the rating agency reported that the expected securities exchange offer or other similar restructuring of Ukraine's foreign currency debt would be classified as the equivalent of a default.
In the message, agency experts also warn that the consequences of a sovereign default for the country’s banking sector could be extremely negative: “The situation with foreign exchange liquidity could become even more tense, and the outflow of deposits could increase, which could lead to defaults of financial institutions. These risks, along with other factors, are reflected in the ratings of Ukrainian banks at the “CCC-” level with “negative” forecasts.”
Let us recall that the outflow of deposits in 2015 did not stop , and about 50 Ukrainian banks are at risk of bankruptcy.
English version :: Read in English The international rating agency that predicted Ukrzaliznytsia's default says the NBU will not be able to support Ukrainian banks.