The international agency Fitch Ratings has downgraded Ukraine's long-term foreign currency rating from C to RD (Restricted Default). The rating will be upgraded after the completion of the $20 billion debt restructuring.
This was stated by Fitch.
The downgrade of Ukraine's rating occurred after the expiration of a 10-day grace period for the payment of a coupon on the 2026 Eurobonds amounting to $750 million, which was due on August 1.
"This marks an event of default under Fitch's criteria with respect to the sovereign's IDR as well as the individual issue rating of the affected security," the statement reads.
According to the agency, on August 9, the Ukrainian government officially initiated the process of obtaining consent for the restructuring of $19.7 billion in outstanding sovereign Eurobonds and $0.7 billion in state-guaranteed bonds of Ukravtodor. The proposal includes significant reductions in terms, including cuts to principal and interest, as well as extensions to maturity dates.
Fitch believes that the completion of the debt restructuring will normalize relations with external creditors. Fitch will then raise Ukraine's long-term IDR to a level that reflects the prospects for debt servicing payments.
As a reminder, on July 22, Ukraine reached an agreement with the Committee of Ukraine’s Eurobond holders on restructuring external debt payments. The agreement will involve exchanging the existing $23.4 billion in Eurobonds for a package of new bonds, with an initial reduction in debt value by 37% and a reduction in net present value by 60%.
