Ukraine has defaulted – Fitch
The country’s credit rating has been cut over failure to make a coupon payment on a 2026 EurobondFitch Ratings has downgraded Ukraine’s credit rating to ‘restricted default’ on Tuesday, citing the expiry of a ten-day grace period for the coupon payment on the country’s $750 million 2026 Eurobond, which was due on August 1.
The US-based credit-rating agency said it has lowered the rating on the 2026 Eurobond to ‘D from ‘C’ and affirmed the other foreign-currency bonds at ‘C.’
The downgrade comes after Kiev passed a law permitting the suspension of foreign debt payments until October 1. On July 18, the Ukrainian parliament approved legislation that allows the government to temporarily suspend payments on state and state-guaranteed external commercial debt until a restructuring agreement with external commercial debt creditors is completed.
“This marks an event of default under Fitch’s criteria with respect to the sovereign’s IDR [Issuer Default Rating] as well as the individual issue rating of the affected security,” Fitch stated.
Rival US ratings agency S&P Global also cut Ukraine’s rating to ‘selective’ default on August 2.
Ukraine has been negotiating with creditors a restructuring of its nearly $20 billion in international debt. A preliminary deal with a committee of its main bondholders was achieved on July 22, two weeks before the grace period for coupon payment expired.
Kiev secured a preliminary deal to suspend debt repayments back in 2022 after the escalation of its conflict with Russia. The two-year payment moratorium on payments expired on August 1.
Fitch had earlier projected Ukraine’s state deficit to remain high, at 17.1% of the country’s GDP this year, noting that defense spending amounted to 31.3% of its annual economic output in 2023. The agency expects government debt to surge to 92.5% of GDP in 2024.
According to the Ukrainian Finance Ministry, the country’s public debt surged by more than $1 billion in June, with its total volume now exceeding $152 billion.
The International Monetary Fund in June revised downwards Ukraine’s gross domestic product forecast for this year to 2.5% from its April estimate of 3.2%, citing worsening sentiment among consumers and businesses over the course of the conflict with Russia.
