Ukraine Downgraded to ‘Selective Default’ Status
S&P has downgraded Ukraine's credit rating to "selective default" after the country failed to make a payment on a Eurobond. Read the full article at RT.com.
TroibNews 
S&P Global Ratings has downgraded Ukraine's credit rating to 'selective default'. This decision came after the country failed to fulfill a payment due on an international bond earlier this week, amid efforts to undergo a significant debt restructuring.
On Thursday, President Vladimir Zelensky enacted a law that defers payments on Ukraine’s external debt for two months, beginning August 1, as the nation works toward a restructuring agreement with its international lenders to stave off a default.
According to S&P, the missed payment involves $34 million due on Ukraine’s 2026 Eurobond, which is currently within its grace period. However, due to the suspension endorsed by the government, the agency anticipates that the payment will not be completed.
“We do not expect the payment within the bond’s contractual grace period of 10 business days,” S&P stated. Following this, the agency downgraded the rating of the 2026 Eurobond to 'D,' previously rated 'CC,' and maintained the 'CC' ratings for Ukraine’s other Eurobonds.
Negotiations are ongoing between Ukraine and its creditors to restructure around $20 billion of its international debt. A preliminary agreement was reached with a committee representing major bondholders on July 22, a fortnight before the end of the grace period for the coupon payment.
The deal reached includes a 37% nominal reduction on the principal of Ukraine’s international bonds, which will save approximately $11.4 billion over the next three years. In return, Ukraine will issue new Eurobonds.
Last week, Fitch, another major Western credit rating agency, indicated an impending default in Ukraine and downgraded its credit rating from 'CC' to 'C'. This rating suggests that the country is either in default or undergoing processes akin to default.
This restructuring marks the second time in a decade that Ukraine has had to renegotiate its debt terms. A similar arrangement in 2015 allowed Ukraine to halt payments on its sovereign debt.
Rohan Mehta for TROIB News
On Thursday, President Vladimir Zelensky enacted a law that defers payments on Ukraine’s external debt for two months, beginning August 1, as the nation works toward a restructuring agreement with its international lenders to stave off a default.
According to S&P, the missed payment involves $34 million due on Ukraine’s 2026 Eurobond, which is currently within its grace period. However, due to the suspension endorsed by the government, the agency anticipates that the payment will not be completed.
“We do not expect the payment within the bond’s contractual grace period of 10 business days,” S&P stated. Following this, the agency downgraded the rating of the 2026 Eurobond to 'D,' previously rated 'CC,' and maintained the 'CC' ratings for Ukraine’s other Eurobonds.
Negotiations are ongoing between Ukraine and its creditors to restructure around $20 billion of its international debt. A preliminary agreement was reached with a committee representing major bondholders on July 22, a fortnight before the end of the grace period for the coupon payment.
The deal reached includes a 37% nominal reduction on the principal of Ukraine’s international bonds, which will save approximately $11.4 billion over the next three years. In return, Ukraine will issue new Eurobonds.
Last week, Fitch, another major Western credit rating agency, indicated an impending default in Ukraine and downgraded its credit rating from 'CC' to 'C'. This rating suggests that the country is either in default or undergoing processes akin to default.
This restructuring marks the second time in a decade that Ukraine has had to renegotiate its debt terms. A similar arrangement in 2015 allowed Ukraine to halt payments on its sovereign debt.
Rohan Mehta for TROIB News
