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S&P downgrades Ukrainian Agrarian Investments to CCC+, outlook negative.

February 12, 2014



The S&P has lowered its long-term foreign currency corporate credit rating on Ukraine-based farming group Ukrainian Agrarian Investments S.A. (UAI) to CCC+ from B-. At the same time, the agency has affirmed the B- long-term local currency rating on UAI. The outlook on both ratings is negative.

The negative rating action on UAI follows the agency's downgrade of Ukraine. The S&P took into the account that UAI's core assets--its land bank, silos, and machinery--are concentrated in Ukraine. The revised T&C assessment constrains the foreign currency rating on UAI because of the likelihood of increased restrictions on repatriation (changing funds held abroad into the local currency) and, more generally, negative sovereign interaction. The agency deems that the deteriorated creditworthiness of the country rises the risk of laws instructing export companies to convert their hard currencies, which could affect the group's dollar-denominated debt service.

The S&P believes that the company is exposed to several risks due to weakening sovereign credit quality. These risks include potential restrictions on transfer of funds from Ukraine and more stringent currency controls. In addition, there is a risk of increased fiscal pressure and obstructed access to financial markets for Ukrainian corporations. Although UAI exports a significant percentage of its production, the agency deems that it is not sheltered from these risks.

Ukrainian Agrarian Investments holding company is engaged in production of agricultural production and tillage. The holding company incorporates 70 farm enterprises.


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Source: IntelliNews - Weekly Reports


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