The Cabinet of Ministers is proposing a friendly restructuring – with no write-off of part of the debt and with little compensation to bond holders.
S&P Global Ratings downgraded Ukraine’s long-term foreign currency sovereign rating from CCC+ to CC. Pre-default rating in relation to the decision of the Cabinet of Ministers to ask bondholders to defer payments on all external obligations for 24 months. Such restructuring, according to S&P, is tantamount to default.
S&P Global Ratings does not rule out that it will downgrade the rating to SD (selective default) if the Ukrainian authorities restructure the state debt. “We believe that the government of Ukraine will almost certainly stop paying at least some of its foreign debt,” the agency said in a statement.
The short-term rating in foreign currency is affirmed at C, in national currency – B-/B. The agency believes that public debt in Hryvnia is less vulnerable to defaults.
S&P notes that Ukraine offers a gentle restructuring – without write-offs of part of the debt and with little compensation to bondholders. This proposal was forced and related to the significant macroeconomic, external and fiscal pressures caused by the war.
As a reminder, Fitch last week downgraded Ukraine’s issuer default rating from CCC to C (pre-default). The decision was also explained by Ukraine’s plans to negotiate with creditors to postpone public debt payments.
Earlier, on the last day of the grace period, Naftogaz did not pay debts on the bonds, which means the company defaulted.
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Source: korrespondent
I am Dylan Hudson, a dedicated and experienced journalist in the news industry. I have been working for Buna Times, as an author since 2018. My expertise lies in covering sports sections of the website and providing readers with reliable information on current sporting events.