Moody`s would need to wait and see the response of governments to tensions between the Ukraine and Russia before making a decision that might affect the country`s rating, Moody`s Ukraine analyst said on Monday.

The cost of insuring against restructuring or default of Ukrainian debt has risen sharply in the past few days, triggered by a row between Ukraine and Russia over the use of a Black Sea port by Russian warships, against the backdrop of Russian conflict with Georgia.

Jonathan Schiffer, vice president with Moody`s in New York, told Reuters in a telephone interview that it was too soon for a ratings response to the rising geopolitical tension, although he said that such tensions could influence ratings decisions.

"Geopolitical issues are among the things we look at," Schiffer said. "We would probably wait and see what Ukraine`s response is, what the EU, U.S. and NATO`s response is. Then we would try to draw up a new balance sheet which takes these things into consideration."

Moody`s rates Ukraine B1 and the ratings have been on review for possible upgrade since March 2008, implying a more than 50 percent chance of an upgrade within 12 to 18 months of that review. Moody`s cited in the review "the apparent diminution of political risk."

Schiffer said there was a danger that growth in Ukraine was too speedy, hindering a near-term upgrade.

"The economy has a negative side to the positive story. The economy has been growing so rapidly, with high credit growth, there were questions about overheating and excessive foreign currency bank borrowing."

Reuters via Guardian