The international rating agency “Moody’s Investors Service” upgraded the ratings of Kharkiv on a global scale in national and foreign currency to Caa3 from Ca. The rating outlook was changed to stable from negative.
As reported in the Department of Economics and municipal property, the rating upgrade is associated with progress of creditworthiness of Ukraine which has a direct impact on the ratings of Kharkiv in connection with its institutional, financial and economic relations with the central government.
In the “Moody’s” noticed that despite reasonable financial indexations, Kharkiv ratings are limited by significant systemic risks which are reflected in the ratings of government bonds. The city is not enough insulated from market risks and does not have sufficient fiscal autonomy which does not allow the city rating exceed the sovereign rating.
Meanwhile, Kharkiv has good financial indexations. The gross operating balance in 2014 amounted to 8.7%, the deficit – 4.4%. The debt policy is reflected in the low levels of net direct and indirect debt towards operating income (2014 – 14.2%).
The stable rating outlook of the city reflects the stable outlook on rating of government bonds as a measure of systemic risks which reflect the current balance of the credit risks for Ukraine. The upgrade of Kharkiv ratings is possible in case of sovereign ratings upgrade.
As the “Moody’s” raised the sovereign rating of Ukraine to “Caa3” so and the rating of Kharkiv was also upgraded. The decision to upgrade was made because of the progress in the process of restructuring of the state debt of Ukraine. Also, due to the progress in political and economic reforms under the auspices of the IMF, reported the press release of the agency.
Today, according to the “Moody’s”, Kharkiv ratings on a global scale in foreign and national currencies are on a par with the sovereign rating – Caa3, stable outlook.
