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Investing.com -- S&P Global Ratings has downgraded Ukraine’s issue rating on its GDP-linked securities to ’D’ from ’CC’, following the country’s failure to make a $0.67 billion payment due on June 2, 2025. The agency does not anticipate the payment to be fulfilled within the securities’ ten business day grace period, due to the government’s moratorium on payments for this bond unless it is restructured.
Simultaneously, S&P Global Ratings confirmed its ’SD/SD’ (selective default) foreign currency (FC) ratings and ’CCC+/C’ local currency (LC) sovereign credit ratings on Ukraine. The outlook for the long-term LC sovereign rating remains stable.
The ratings on Ukraine are subject to certain publication restrictions as per the EU CRA Regulation 1060/2009. Deviations from the announced calendar are permitted in limited circumstances and must be accompanied by a detailed explanation. The missed payment on the GDP-linked securities is the reason for the deviation in this instance. The next scheduled publication on the sovereign rating on Ukraine is set for September 5, 2025.
S&P Global Ratings does not assign an outlook to the long-term FC rating on Ukraine as the rating is ’SD’. The stable outlook on the long-term LC rating reflects the balance between significant fiscal pressures and the government’s incentives to service Ukrainian hryvnia-denominated debt to avoid distress to domestic banks, the primary holders of the government’s LC bonds.
The agency noted potential scenarios for future rating changes. The LC ratings could be lowered if there are indications that hryvnia-denominated obligations could go unpaid or face restructuring. On the other hand, the long-term FC rating could be raised if it is expected that no further broad resolution of the outstanding defaulted obligations will occur and that the ability of debtholders with untendered debt to materially disrupt the issuer’s financial ability was limited.
Lastly, the LC ratings could be raised if Ukraine’s security environment and medium-term macroeconomic outlook improve. These forward-looking views will be incorporated into the agency’s analysis of the sovereign’s post-default credit factors.
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