The international rating agency, which predicted the default of Ukrzaliznytsia, says that the NBU will not be able to support Ukrainian banks
The international rating agency, which recently predicted the technical default of Ukrzaliznytsia, claims that the National Bank of Ukraine has almost exhausted its ability to lend to the country’s banks to keep them afloat, reports RBK-Ukraine.
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The National Bank of Ukraine (NBU) will continue to provide support to Ukrainian banks in the form of loans and borrowings, but its ability to support the system in this way is reduced. This was reported by the press service of the international rating agency Standard & Poor's (S&P). Thus, the NBU has lent billions to Privatbank alone in the last few months hryvnia.
At the moment, the Ministry of Finance of Ukraine is holding negotiations on writing off the huge public debt, which must be paid in 2015. Negotiations reached a dead end on Tuesday, reports Bloomberg.
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, the exchange control mechanisms and restrictions on the withdrawal of retail deposits in national and foreign currencies, introduced by the NBU more than a year ago, do not allow the agency to assign a “selective default” (“SD”) rating to Ukrainian banks. Let us remind you that on April 10 of this year, S&P has already downgraded the long-term sovereign credit rating of Ukraine for obligations in foreign currency from “CCS-” to “SS”. Similarly, literally a week before the technical default of Ukrzaliznytsia, announced on the 12th May, S&P predicted her 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 remind you that the outflow of deposits in 2015 did not stopped, about 50 Ukrainian banks are under threat bankruptcy.
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