S&P downgrades Ukraine’s long-term foreign currency rating to CC

At the same time, the agency affirmed Ukraine’s short-term foreign currency rating at C and short-term local currency rating - at B-/B

International rating agency S&P said it had lowered Ukraine's long-term foreign currency sovereign credit rating from CCC+ to CC with a negative outlook, Qazet.az reports.

At the same time, the agency affirmed Ukraine’s short-term foreign currency rating at C and short-term local currency rating at B-/B. According to S&P, Ukraine’s national-currency-nominated state debt is less vulnerable to non-payment.

The negative outlook reflects high risks to Ukraine's commercial debt service payments, given the government's debt restructuring plans, which stem from economic, balance-of-payments, and fiscal pressure from the Kiev government’s conflict with Russia.

"We believe it is virtually certain that the Ukrainian government will stop payments on at least some foreign debt," the rating agency said.

S&P affirms the CC rating when the default has not yet been formally announced but is almost certain to happen.

On July 20, the Ukrainian Cabinet of Ministers resolved to seek a two-year deferral of external debt payments. For the deal to come into force, the Kiev government is supposed to agree on new terms with the debt holders. The international group of Ukraine’s creditors, which includes Britain, Canada, France, Germany, Japan and the United States, supported Kiev’s request to suspend debt repayments until the end of 2023. The group also urged private-sector bondholders to show a similar approach.