The increase in the long-term default rating is due to external debt restructuring.
International rating agency Fitch has upgraded Ukraine’s foreign currency credit rating from RD (limited default) to CC (insufficient creditworthiness). This was stated in a report published on August 17.
The upgrade follows an Aug. 11 approval for external debt restructuring, which the agency says eliminates “limited default.”
“Principal and interest payments on approximately $6 billion of Ukrainian Eurobonds have been postponed for 24 months, easing pressure on external debt servicing in the context of weakening international reserves and severe spending needs related to to war,” Fitch analysts said.
The restructuring was approved by 75% of the bondholders (at an aggregate nominal value), exceeding the required minimum of 66.7%.
“Despite this debt service relief, the CC rating reflects the unresolved debt sustainability risks associated with a Russian attack, as well as the severe stress of the public and external fiscal and positional macro-financial of Ukraine. We expect the war to continue until 2023, leaving public debt exceeding 100% of GDP,” the agency asserted.
Recall that at the end of July, Fitch lowered Ukraine’s long-term default rating from CCC to C (pre-default), and then to RD (limited default).
Last week, Ukraine was granted a grace period on its external debt. Foreign creditors have frozen payments on international bonds for two years to prevent a default.
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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.