Credit ratings agency Standard & Poor`s said on Friday it had cut Ukraine`s long-term foreign currency rating to B from B+ and said the outlook was negative, citing the cost of bailing out the country`s banking sector, Reuters reported.

"The downgrade reflects the rising cost to the government of a necessary recapitalisation of the banking sector against a backdrop of declining growth and heightened exchange rate risk," S&P credit analyst Frank Gill said in a client note.

S&P said that a substantial IMF loan for Ukraine was likely to be approved soon.

But Gill added: "The negative outlook indicates that the sovereign ratings on Ukraine could be cut again if there are significant delays in reaching agreement with the IMF, or if the lack of an internal political consensus undermines the government`s ability to implement an IMF program."