Fitch agency downgraded Ukraine’s credit rating to default status

Fitch Ratings downgrades Ukraine’s credit rating from “CC” to “C”, indicating default has occurred or is inevitable.

This information was reported by the agency’s press service.

The decision was made due to a new debt restructuring agreement with bondholders. The proposal includes a nominal discount of 37% on Ukraine’s outstanding international bonds, allowing Kyiv to save $11.4 billion in payments over the next three years.

“The downgrade of Ukraine’s rating reflects Fitch’s view that the in-principal agreement reached on July 22 between the government and some Eurobond holders on restructuring terms, following the adoption of a law allowing the government to suspend external debt payments, marks the start of a process akin to default,” the Fitch statement reads.

In June, Ukraine failed to reach an agreement with holders of 20% of its bonds to restructure $20 billion in debt. They rejected Kyiv’s proposal to reduce the value of foreign currency bonds by 60% and counter-offered a 22% reduction.

Additionally, it was previously reported that Pavel Frolov, a member of the Budget Committee of the Verkhovna Rada of Ukraine, stated that Ukraine has the largest budget deficit in the world due to the war, with the country’s expenses being double its income.