International rating agency Fitch Ratings has upgraded Ukraine’s long-term foreign currency issuer default rating (IDR) to “CCC” from ‘RD’ (“Restricted Default”) following progress in restructuring GDP warrants.
“The upgrade reflects our assessment of the normalization of Ukraine’s relations with most of its external commercial creditors,” the agency said in a statement.
Earlier, on December 18, it was announced that 99% of investors supported the exchange of GDP warrants for Eurobonds, and together with the restructuring of sovereign and state-guaranteed debt in August 2024, Ukraine, according to Fitch’s estimates, restructured 94% of its commercial external public debt and state-guaranteed debt.
It is noted that under the terms of the exchange, Ukraine will convert almost the entire outstanding nominal amount of GDP warrants ($2.6 billion) into a new class of C bonds maturing in 2032 at a ratio of 1.34 for an amount of approximately $3 billion 497.67 million (and a small portion into B bonds issued during last year’s Eurobond restructuring with maturities in 2030 and 2034 in the amount of $16.91 million each). At the same time, in early June, Ukraine missed a payment on these warrants in the amount of $665 million.
Fitch also noted the European Union’s (EU) approval of a new EUR90 billion loan for Ukraine, which is to be repaid only if reparations are received from Russia. According to the agency, this will cover financing needs for more than a year and reduce short-term debt sustainability risks.
At the same time, Fitch noted that the “CCC” rating reflects significant credit risks due to the war and its macroeconomic and fiscal consequences, although these risks are partially offset by a manageable repayment profile in the near term, significant foreign exchange reserves, and EU support.
