S&P Global Ratings has downgraded Ukraine’s credit rating to ‘selective default’ after missing an international bond payment and seeking a major debt restructuring. President Zelensky signed a law suspending payments on external debt liabilities for two months starting August 1 to reach an agreement with international creditors and avoid default.
The $34 million payment on Ukraine’s 2026 Eurobond is still in the grace period, but with the authorized suspension, payments are unlikely to be made, according to S&P. A preliminary deal with bondholders on a 37% nominal haircut was made, saving Kiev $11.4 billion. Ukraine will issue new Eurobonds in return.
Fitch also lowered Ukraine’s credit rating to ‘C’, signaling an imminent default. This is Ukraine’s second debt restructuring in ten years, following one in 2015. With ongoing negotiations with creditors, the country is working to stabilize its financial situation and avoid default.
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