(Reuters) – Global ratings agencies S&P and Fitch on Friday downgraded Ukraine’s currency ratings, saying they viewed the country’s debt restructuring as struggling.
Earlier this week, Ukraine’s foreign creditors backed the country’s request for a two-year freeze on payments on nearly $20 billion in international obligations, according to a regulatory filing, allowing the war to avoid a disorderly default.
S&P lowered Ukraine’s currency rating to “SD/SD” from “CC/C.
“Given the announced terms and conditions of the restructuring, and consistent with our criteria, we consider the transaction to be in difficulty and tantamount to default,” the rating agency said.
Fitch downgraded the country’s long-term foreign currency from “DR” to “C” as it views the postponement of debt payments as the completion of a distressed debt swap.
S&P also said macroeconomic and fiscal tensions stemming from Russia’s invasion of Ukraine could weaken the Ukrainian government’s ability to stay current on its local currency debt and downgraded the country’s local currency rating. Eastern Europe from “CCC+/C” to “B-/B”. .
Beaten by the war that began on February 24, Ukraine faces an economic contraction of 35-45% in 2022 and a monthly budget deficit of $5 billion.
(Reporting by Bhanvi Satija and Aishwarya Nair in Bengaluru; Editing by Maju Samuel)