Ukraine’s credit rating has been downgraded to ‘restricted default’ by Fitch Ratings due to the country’s failure to make a coupon payment on a 2026 Eurobond. The credit-rating agency lowered the rating on the Eurobond to ‘D’ from ‘C’ and affirmed the other foreign-currency bonds at ‘C.’
This downgrade follows the passing of a law in Kiev allowing the suspension of foreign debt payments until October 1. The move came after a preliminary deal was secured with main bondholders to restructure nearly $20 billion in international debt. However, the grace period for the coupon payment expired before the restructuring agreement was finalized.
Fitch had previously projected high state deficits and increasing government debt for Ukraine, with defense spending accounting for a significant portion of the country’s economic output. The International Monetary Fund also revised downward Ukraine’s GDP forecast for the year, citing worsening sentiment amid the conflict with Russia.
Overall, Ukraine’s public debt has surpassed $152 billion, highlighting the financial challenges facing the country as it navigates its debt obligations and economic uncertainties.