Fitch Ratings has affirmed Ukraine's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at 'Restricted Default' (RD) as Ukraine remains in the process of restructuring its external commercial debt.
This is stated on the rating agency's website.
"The debt service suspension is expected to last until the end of the debt restructuring process. Ukrenergo failed to pay its deferred interest on 9 November 2024. Ukraine's LTFC IDR will remain 'RD' until Fitch judges the exchanges have been completed and relations with a significant majority of external commercial creditors are normalised," Fitch said.
Ukraine's Long-Term Local-Currency Issuer Default Rating (LC IDR) is maintained at "CCC+". A significant part of the national debt belongs to the NBU and Ukrainian banks.
"In our view, this ownership structure would limit the benefits to Ukraine from any LC debt restructuring by creating potential fiscal costs (including bank re-capitalisation). Such a restructuring could also create risks for financial sector stability and impair development of the domestic debt market," Fitch said in a statement.
Fitch expects the general government deficit to remain high at 19.1% and 19.2% in 2024 and 2025.
The agency forecasts that despite the recent tax hike, high defense spending and reduced foreign grants will contribute to the maintenance of a significant deficit.
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