S&P: Kyiv on developing watch

Standard & Poor's said that it placed the CCC+ long-term issuer credit rating on Kyiv on CreditWatch with developing implications.

The CreditWatch placement reflects uncertainty about Kyiv's need to obtain new authorization from the Ukrainian central government for a proposed bond placement to refinance existing loan-participation notes on which a first bullet payment falls due in mid-July, the agency said.

S&P said it is concerned about the central government's actions in granting new approval if the city fails to meet a bond coupon target contained in the existing authorization.

The ratings on Kyiv continue to reflect the city's material foreign-currency debt repayment needs in 2011 and 2012, limited fiscal flexibility, weak budgetary performance and contingent liabilities resulting from the city's companies, the agency added.

Support for the ratings is provided by the city's position as Ukraine's key domestic economy and role as one of the host cities for the 2012 UEFA European Football Championship, its diverse and wealthy economy and the expectation of some institutional support from the central government, S&P said.

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