S&P: Ukraine Likely To Default

Country downgraded as raging political crisis leads ratings agency to warn that its government will not be able to pay its debts

Ambrose Evans Pritchard: Financial crisis threatens Russia as Ukraine spins out of control

Standard & Poor's ratings agency has lowered Ukraine's long-term rating from 'CCC+' to 'CCC' saying the raging political crisis has put the government's ability to service its debt at risk and raised uncertainty over Russia providing promised aid.

"We now believe it is likely that Ukraine will default in the absence of significantly favorable changes in circumstances, which we do not anticipate," the agency said in a note a day after the deadliest day in the ex-Soviet country's three-month-old political crisis left more than 60 anti-government protesters shot dead.

"The downgrade reflects our view that the political situation in Ukraine has deteriorated substantially. We believe that this raises uncertainty regarding the continued provision of Russian financial support over the course of 2014, and puts the government's capability to meet debt service at increasing risk," it said.

The crisis in economically-struggling Ukraine erupted in November when President Viktor Yanukovych decided unexpectedly to reject a European Union integration deal years in the making in favour of closer ties with Russia.

Moscow then promised to provide a $15bn (£9bn) dollar bailout to its former satellite and to slash prices that Kiev paid for energy supplies.

The Kremlin provided the first $3bn tranche of the promised aid at the end of January and had promised to release the second tranche this week.

(Edited for Telegraph.co.uk by James Titcomb)