International agency Fitch Ratings has downgraded Ukraine's long-term foreign currency default rating from CC (high probability of default) to C (default imminent). This decision is due to an agreement between the Ukrainian government and Eurobond holders on the terms of restructuring.
In a statement, Fitch said the deal involves a significant reduction in principal and interest, as well as an extension of maturity. The restructuring, the agency predicts, means that Ukraine will not be able to service its external commercial debt, including the 2026 Eurobond coupon, due on August 1, until the deal with bondholders is completed.
Ukraine currently has $19.7 billion in outstanding bonds and owes $2.6 billion in GDP warrants, a fixed-income instrument whose payments are tied to economic growth. Last week, the Verkhovna Rada supported the government's right to suspend payments on its public debt during the restructuring.
