Fitch Lowers Ukraine's Credit Rating, Pushing It Deeper into Default Territory
Fitch Ratings has lowered Ukraine's rating to 'C' in light of its $20 billion debt, indicating that a default or a default-like situation has started. Read Full Article at RT.com
TroibNews 
Fitch, a US-based credit rating agency, has recently lowered Ukraine's credit rating due to concerns about a potential default. The downgrade from 'CC' to 'C' was announced on Wednesday, indicating the start of what the agency believes to be a default or a process akin to default.
This adjustment follows an initial agreement between Ukraine and a coalition of international investors to restructure its massive $20 billion debt. The preliminary agreement, which was forged with the bondholders' committee this Monday, involves a 37% reduction in the nominal value of Ukraine's outstanding international bonds, thereby saving approximately $11.4 billion in payments over the forthcoming three years. In exchange, Ukraine will issue new Eurobonds.
Last week, legislative changes were enacted by the Ukrainian parliament that permit the government to temporarily halt debt payments for three months, providing a window for finalizing the restructuring deal with investors.
“The reported agreement with external commercial creditors constitutes a distressed debt exchange (DDE) under its sovereign rating criteria,” Fitch stated. Furthermore, the agency views these developments as “the start of a default-like process.”
Fitch also forecasts Ukraine's state deficit to remain elevated at 17.1% of its GDP for the current year, influenced heavily by defense expenditures, which represent 31.3% of the country's GDP in 2023. Looking ahead, the agency anticipates that government debt will rise to 92.5% of the national GDP by 2024.
Sanya Singh for TROIB News
This adjustment follows an initial agreement between Ukraine and a coalition of international investors to restructure its massive $20 billion debt. The preliminary agreement, which was forged with the bondholders' committee this Monday, involves a 37% reduction in the nominal value of Ukraine's outstanding international bonds, thereby saving approximately $11.4 billion in payments over the forthcoming three years. In exchange, Ukraine will issue new Eurobonds.
Last week, legislative changes were enacted by the Ukrainian parliament that permit the government to temporarily halt debt payments for three months, providing a window for finalizing the restructuring deal with investors.
“The reported agreement with external commercial creditors constitutes a distressed debt exchange (DDE) under its sovereign rating criteria,” Fitch stated. Furthermore, the agency views these developments as “the start of a default-like process.”
Fitch also forecasts Ukraine's state deficit to remain elevated at 17.1% of its GDP for the current year, influenced heavily by defense expenditures, which represent 31.3% of the country's GDP in 2023. Looking ahead, the agency anticipates that government debt will rise to 92.5% of the national GDP by 2024.
Sanya Singh for TROIB News
