Fitch and S&P downgraded Ukraine’s rating to "limited default"
The Fitch and S&P rating agencies have downgraded Ukraine’s credit ratings due to the two-year delay in payments on the state debt.
This is reported by Censor.NET with reference to Liga.net.
On August 10, the Ministry of Finance announced that the repayment terms of all 13 series of sovereign Eurobonds will be extended by two years. Coupon payments due in the next two years are also deferred for this period. Thanks to this, over the next two years, Ukraine will be able to save almost $6 billion.
However, from the point of view of rating agencies, this means default.
Fitch stated that they consider the completion of the operation on the management of public debt obligations as an exchange of problematic debt and therefore lower Ukraine's rating to 'RD' (restricted default), and all bond issues - to 'D'. Previously, they were at pre-default level 'C'.
According to the S&P scale, Ukraine's rating is now at the 'SD' (selective default) level, and Eurobonds - at the 'D' level.
When the restructuring of commercial debt in foreign currency takes effect, agencies will be able to consider Ukraine out of default and its rating will be upgraded from 'SD'.
This is the second time Ukraine is forced to agree with creditors on changing the terms of debt repayment due to the war with Russia. In 2015, rating agencies also downgraded Ukraine to default, but returned it after restructuring.
