Standard & Poors has joined Fitch in lowering Ukraine’s rating. The news here is not the new rating. The real story is that the continuing political stalemate in Kyiv. At some point the government will have to change course to respond to the crisis. Options are running out.

This from www.reuters.com:

S&P may cut Ukraine’s ratings on refinancing worries

Standard & Poor`s Ratings Services warned on Monday it could cut the foreign and local sovereign ratings of Ukraine in the next 90 days as it doubts the country`s ability to implement the IMF`s loan agreement, Reuters reported.

S&P said it could cut Ukraine`s B foreign currency rating and B-plus local currency rating by one or more notches. For a full text of the agency`s statement please double-click on [ID:nHKG238893].

“Ukraine`s political commitment to implementing the IMF loan`s conditions, including structural fiscal tightening and banking-system consolidation, is wavering against a backdrop of sharply contracting growth, weakened terms of trade, and approaching presidential elections,” the agency said in a statement.

S&P said it was awaiting the government`s clarification on the IMF programme before deciding on the rating and warned the economy faced refinancing risk because both the government and private sector suffered from a lack of funding sources.

“The near total closure of the external borrowing channel has contributed to a loss of confidence of domestic economic agents in the stability of the exchange rate and the banking system,” S&P said.

It said that as of end-January, Ukraine`s external reserves covered just over 100 percent of this year`s banking sector repayments leaving nothing for corporate obligations, estimated at $9.5 billion. The figure excludes trade financing.

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