Rating agencies S&P and Fitch downgraded Ukraine on Friday, now only one notch from default, following the announcement of a moratorium on its external debt obtained Wednesday from its international creditors. S&P thus downgraded the ratings long and short term debt in foreign currencies, from CC/C to SD (“selective default”). “Given the announced terms and conditions of the restructuring, and in accordance with our criteria, we consider this transaction as (…) equivalent to a default”, indicates S&P. Ukraine has obtained from its international creditors a two-year moratorium on its external debt, valued at 20 billion dollars Fitch has downgraded its long-term debt from C to RD (“restricted default”) . Neither of the two agencies, however, accompanied this rating, given its character, with an outlook indicating whether it plans to raise or lower it, or maintain it. A country is considered in default when it is unable to honor its commitments to its creditors. The default is qualified as partial when the State does not reimburse part of its obligations. A group of Western creditors including France, the United States, Germany, Japan and the United Kingdom had agreed on July 20 to a postponement of interest payments on the Ukrainian debt following a request from kyiv, urging other bondholders to do the same. Ukraine’s economy has collapsed since the start of the war with Russia launched on February 24 and might see its GDP plunge by 45% this year, according to World Bank estimates. Measures to defer Ukraine’s payment of its bonds might save it at least $3 billion over two years, according to Bloomberg. (Belga)
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