By John Meyer, consultant in financial affairs – Eurasia Business News, August 14, 2024. Article n°1170.
The international rating agency Fitch reflected in the rating of Ukraine the expiration of a ten-day grace period for the country to pay a coupon on Eurobonds for $750 million maturing in 2026. The long-term foreign currency issuer default rating has been downgraded from C to RD (limited default).
“The downgrade of Ukraine’s issuer default rating to “RD” follows the expiration of the ten-day grace period for coupon payment on $750 million Eurobonds maturing in 2026, which matured on August 1. This means a default event in accordance with Fitch’s criteria for the sovereign issuer default rating, as well as the individual issue rating of the affected security,” Fitch said in a statement on its website.
The rating agency believes that Ukraine’s request to restructure Eurobonds for $19.7 billion and Ukravtodor bonds for $0.7 billion is an attempt to exchange bad debt. Fitch notes that Kyiv’s proposal involves “a significant reduction in conditions, including a reduction in principal and interest, as well as an extension of maturities.”
The rating of the $750 million Eurobonds maturing in 2026 was downgraded from C to D. The rating of other foreign currency bonds was affirmed at C. However, Fitch withdrew the ratings of the foreign currency bond issue, as they are no longer considered to be in line with the agency’s scope.
In early August, the international rating agency S&P downgraded Ukraine’s credit rating from CC/C to SD/SD (selective default). The decision was explained by Kiev’s plans to restructure foreign loans and suspend payments on bonds.
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Since August 1, Ukraine has temporarily suspended interest payments on foreign government bonds of 2018. President Volodymyr Zelensky gave the government the right to suspend such payments until October to reach an agreement with creditors on restructuring.
Two years ago, in July 2022, the rating agency Fitch had already downgraded the long-term issuer default rating of Ukraine from CCC to C (pre-default). The decision followed the Kiyv’s plans to agree with creditors on the postponement of payments on the national debt for 24 months. The U.S. credit rating agency does not rule out downgrading the Ukraine’s rating to RD (limited default).
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© Copyright 2024 – Eurasia Business News. Article No. 1170
