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Research Update: Ukraine Long-Term Ratings Lowered To 'B-', Placed On CreditWatch Negative On Fallout From Russia's Military Attack


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Russia-Ukraine Military Conflict: Key Takeaways From Our Articles

Research Update: Ukraine Long-Term Ratings Lowered To 'B-', Placed On CreditWatch Negative On Fallout From Russia's Military Attack


  • Russia's military assault on Ukraine poses risks to Ukraine's economic growth, financial stability, external position, and public finances.
  • We therefore lowered our long-term foreign and local currency ratings to 'B-' and placed them on CreditWatch negative.
  • The CreditWatch negative indicates that we could lower the ratings if multiple uncertainties connected to the military conflict were to significantly weaken Ukraine's external liquidity, financial system, or the government's administrative capacity.

Rating Action

On Feb. 25, 2022, S&P Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on Ukraine to 'B-' from 'B'. We affirmed the 'B' short-term foreign and local currency ratings. We also lowered the national scale rating to 'uaBBB-' from 'uaA'. We placed all these ratings on CreditWatch with negative implications. At the same time, we revised our transfer and convertibility assessment on Ukraine to 'B-' from 'B'.

As a "sovereign rating" (as defined in EU CRA Regulation 1060/2009 "EU CRA Regulation"), the ratings on Ukraine are subject to certain publication restrictions set out in Art 8a of the EU CRA Regulation, including publication in accordance with a pre-established calendar (see "Calendar Of 2022 EMEA Sovereign, Regional, And Local Government Rating Publication Dates," published Dec. 16, 2021, on RatingsDirect). Under the EU CRA Regulation, deviations from the announced calendar are allowed only in limited circumstances and must be accompanied by a detailed explanation of the reasons for the deviation. In this case, the reason for the deviation is the risk of significant macroeconomic fallout from the military intervention into Ukraine. The next scheduled publication on the sovereign rating on Ukraine is on March 11, 2022.


The CreditWatch negative speaks to the multiple risks to Ukraine's economy, balance of payments, public finances, and financial and political stability stemming from Russia's military assault.

We expect to resolve the CreditWatch placement within 90 days. We could lower the ratings further should the uncertainty posed by the conflict lead to a drain on Ukraine's external liquidity or a rise in contingent liabilities from its commercial banking system. The rating might also come under pressure should we expect military actions to prevent the authorities from servicing commercial debt.


The ratings on Ukraine are constrained by the country's low per capita income and developing institutions. On the other hand, stronger macroeconomic management since 2015 and relatively high foreign currency reserves support the sovereign ratings. The implementation of macroeconomic reforms in recent years has helped the government access commercial debt markets and receive concessional funding from international financial institutions.

However, the decision by Russia to launch a military attack on the country has added significant downside risks to the economic outlook, with the potential for negative confidence effects and governance disruptions putting commercial debt servicing at risk, in our view.

Ukraine's GDP, unlike many other European countries', proved relatively resilient to the COVID-19 pandemic during both 2020 and 2021. However, escalating tensions with Russia, followed by the Russian attack on Ukraine, have upended the gradually improving economic outlook. Ukraine now faces the possibility of disruption to key economic sectors, such as its significant agricultural exports and gas pipeline network.

The negative economic effects from the unpredictable and unevenly matched military conflict are, at this point, difficult to quantify but will weigh on Ukraine's creditworthiness, in our view. We see a heightened risk of cyberattacks on Ukraine with the aim of inflicting damage on its official and private-sector IT operations.

In 2022, the government has received commitments and guarantees of concessional funding and grants that include:

  • A $1 billion guarantee from the U.S. government;
  • A €1.2 billion emergency macrofinancial assistance program from the EU;
  • A loan for budgetary purposes of up to $500 million from the Canadian government, in addition to a $120 million loan that was announced on Jan. 21, 2022;
  • A $500 million guarantee from the U.K. government to support Ukraine and mitigate the economic effects of Russian aggression;
  • €300 million in financial aid from Germany; and
  • $100 million in emergency loans from Japan.

This comes on top of Ukraine's $5 billion Stand-By Arrangement with the IMF, agreed upon in June 2020 and extended until end-June 2022. Given these external financing credits and grants, we calculate that all of Ukraine's external and domestic financing requirements are fully funded for 2022, although commercial markets are essentially closed. However, there are risks that the conflict could prevent the Ukrainian government from utilizing these funds.

Ahead of the military conflict, we estimated nonperforming loans in the Ukrainian banking system would decline to about 25% by year-end 2022 from 30% at end-2021. However, given the substantial expected fallout of the military conflict on the private sector, the outlook for asset quality is likely to move in the opposite direction, while confidence could also weigh on banks' liquidity positions.

Related Criteria

Related Research

In accordance with our relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable (see 'Related Criteria And Research'). At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision.

After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts.

The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above.

The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action (see 'Related Criteria And Research').

Ratings List

Downgraded; CreditWatch/Outlook Action; Ratings Affirmed
To From


Sovereign Credit Rating B-/Watch Neg/B B/Stable/B
Ukraine National Scale uaBBB-/Watch Neg/-- uaA/--/--
Transfer & Convertibility Assessment B- B
Senior Unsecured B-/Watch Neg B
Senior Unsecured D D

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at for further information. A description of each of S&P Global Ratings' rating categories is contained in "S&P Global Ratings Definitions" at Complete ratings information is available to subscribers of RatingsDirect at All ratings affected by this rating action can be found on S&P Global Ratings' public website at Use the Ratings search box located in the left column. Alternatively, call one of the following S&P Global Ratings numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; or Stockholm (46) 8-440-5914

Analytical Group Contact:Sovereign and IPF EMEA;

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