S&P Global Ratings today lowered its long- and short-term counterparty credit ratings on Ukraine-based PrivatBank to 'R/R' (indicating the obligor is under regulatory supervision) from 'B-/C'.

The downgrade reflects the regulatory risk related to the National Bank of Ukraine's (NBU) declaration of PrivatBank as insolvent, the bank's nationalization, as well as the possible - though not certain - introduction of a moratorium on some of PrivatBank's credit obligations by the government.

Any further rating actions on PrivatBank will largely depend on the details of its recapitalization plan to be implemented by NBU and on our opinion of the bank's business and financial prospects once these details are available and after the recapitalization plan has been implemented.

S&P does not rate any debt issued by PrivatBank.

As reported, the government under a proposal of the NBU and shareholders in PrivatBank on December 18 made the decision to nationalize the financial institutions: the state would receive 100% of the bank's capital, and the issue of government domestic loan bonds for this purpose is estimated at UAH 116.8-148 billion.

According to the nationalization conditions, bail-in is foreseen for PrivatBank's eurobonds. The NBU considers them as liabilities affiliated with former owners of the bank.