The international rating agency S&P Global Ratings has downgraded the long-term sovereign credit rating and issuer rating in foreign currency of Ukraine to “CC” from “CCC”, the outlook is “negative”, the agency said in a statement. Interfax-Ukraine reports this.
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“We expect that the Ukrainian government will begin formal negotiations on debt restructuring with private creditors in the short term and complete this process by the middle of this year. We consider it almost certain that Ukraine will default on its external commercial obligations,” the agency explained its actions.
At the same time, S&P confirmed our short-term ratings of Ukraine in foreign currency “C”, in national currency “ССС+/С” and on the national scale “uaBB”. The outlook for the rating in foreign currency is “negative”, and for the rating in national currency it is “stable.”
“We understand that Ukraine’s public debt, denominated in hryvnia, is not subject to the debt restructuring plan,” the agency noted.
It added that it would likely downgrade the rating to “SD” (selective default) during the restructuring, as it would view it as problematic in light of the long-term balance of payments and fiscal problems.
S&P recalled that a group of Ukraine’s creditors has already extended the deferment of payments on official bilateral debt until the end of the IMF program in 2027, however, their participation in additional debt restructuring is possible if private external creditors agree to an equally favorable debt restructuring.
< p>To this end, the government plans to achieve relief from the burden on Eurobonds before the expiration of the existing moratorium on payments on them in August this year.