Chinese agency lowers Ukraine sovereign debt rating in Russian invasion aftermath
- China Chengxin says further downgrades could follow as repayment capacity falls
- Ukraine is now in the same category as Venezuela and one notch lower than Myanmar
“The sudden geopolitical incident will have an all-around negative impact on Ukraine, including an accelerated economic recession, soaring fiscal burdens, a sudden rise in fragility and systemic risks. Its sovereign repayment capability will be damaged,” Beijing-based Chengxin said.
The CCCg rating for Ukraine reflects weak debt repayment capacity and high risks, and Chengxin said further downgrades could follow. Its rating is now in the same category as Venezuela and one notch lower than Myanmar.
The agency warned that Ukraine would face much higher risks in international markets and its forex reserves of US$27.7 billion would not be able to cover sovereign debt maturing this year.
“The outbreak of war will put further pressure on the Ukrainian economy, as it will devastate its industrial and agricultural production capacity, upend investor confidence and lower export orders. Its economy is expected to fall into a deep recession in 2022,” it said.
Chengxin’s downgrade reflects concerns about growth in the world’s second-largest economy, which is facing headwinds from US trade tensions, pandemic controls and the global economic uncertainties.
Also on Friday, international rating giant S&P lowered Russia’s long-term foreign currency credit rating to BB+ from BBB-, also junk status, saying Western sanctions could carry significant negative implications for the Russian banking sector’s ability to act as a financial intermediary for international trade.
