S&P downgrades PrivatBank

Standard & Poor’s said it lowered the long-term counterparty credit rating on PrivatBank to CCC- from CCC.

The outlook is negative.

The bank’s C short-term counterparty credit rating also was affirmed.

The downgrade follows the recent lowering of the long-term sovereign credit rating on Ukraine to CC, S&P said.

The sovereign downgrade indicates that Ukraine’s default on its foreign-currency central government debt is a virtual certainty, the agency said.

The consequences of a sovereign default are unpredictable, but S&P said it considers that they could be severe for the financial profile of any commercial bank in Ukraine, even a strong bank like PrivatBank in the local context.

The sovereign downgrade followed news of the Ukrainian government’s intention to restructure its foreign-currency commercial debt, S&P said.

The government intends to commence debt-restructuring talks with external commercial creditors soon, the agency added, and conclude them by the end of May.

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