The international agency Fitch Ratings has upgraded Ukraine's long-term rating in local currency from CCC- to CCC+. At the same time, the agency confirmed the long-term foreign currency rating at "RD" (restricted default).
This was reported by Fitch.
The upgrade reflects the successful completion of Ukraine's Eurobond debt restructuring while continuing to service its debt obligations in hryvnia, the agency stated.
Fitch believes that the successful completion of Ukraine's Eurobond debt restructuring is only part of a broader ongoing restructuring episode, as the government has announced the suspension of other payments.
"Therefore, Ukraine's long-term foreign currency rating will remain at 'RD' until Fitch determines that the exchanges are complete and relations with the majority of external commercial creditors are normalized," the statement said.
According to Fitch, on August 30, Ukraine completed the restructuring of its outstanding sovereign Eurobonds ($19.7 billion) and state-guaranteed debt of "Ukravtodor" ($0.7 billion) for a total of $20.5 billion ($24.3 billion, including accrued interest from a two-year moratorium on Eurobond payments in August 2022) across eight Eurobonds with a principal of $15.2 billion.
Fitch assigned the newly issued bonds a rating of "CCC." This reflects Ukraine's reduced external debt servicing on the bonds, with no principal payments until 2029 and managed coupon payments of $165 million (0.1% of forecasted GDP) in 2025 and $423 million (0.2% of forecasted GDP) in 2026.
The restructuring, supported by 97% of bondholders, leads to a nominal debt reduction of 37% and significant long-term debt service savings (estimated at $22.8 billion by 2033). Fitch forecasts that Ukraine's total public debt will amount to 89.6% of GDP in 2024 (excluding the restructuring of other commercial obligations), which is lower than the 92.5% forecast made in June following the debt exchange operation.
Fitch notes that Ukraine is still in the process of restructuring external commercial debt unrelated to bonds. At the end of August, the government ordered a temporary suspension of payments on the instruments involved. These include external commercial credit (Cargill $0.7 billion, with payments suspended from September 3, 2024), state-guaranteed "Ukrenergo" Eurobonds ($825 million, payments suspended from November 9, 2024), and GDP warrants (payments suspended from May 31, 2024). The suspension of debt servicing is expected to continue until the restructuring process is completed.
