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Fitch preserves Ukraine's rating at CC and believes that the war will last until 2024

Fitch preserves Ukraine's rating at CC and believes that the war will last until 2024

Fitch preserves Ukraine's rating at CC and believes that the war will last until 2024

The international credit rating agency Fitch Ratings Inc. has affirmed Ukraine's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'CC'.

Quote"The affirmation of Ukraine's Long-Term Foreign-Currency IDR at 'CC' reflects Fitch's expectation of a further commercial debt restructuring before the two-year standstill on Eurobond payments expires in September 2024," the agency wrote.

External sovereign debt service rises to $7.6 billion in 2025, while large fiscal deficits into the medium term will add to already high public debt.

The agency predicts that Ukrainian authorities would likely prefer a single comprehensive debt restructuring next year, but if security-related uncertainty precludes this, an intermediate step of further deferral on Eurobond payments is anticipated.

'CCC-' Local-Currency IDRs are also affirmed. The higher rating than foreign-currency debt reflects greater disincentives to restructure local-currency debt. 48% is held by National Bank of Ukraine and 38% by the domestic banking sector, half of which is state-owned, with only 4% held by non-residents.

The agency doesn’t see significant international pressure to bring domestic debt into a restructuring, also due to risks to domestic demand for government debt and confidence in banks.

Quote"Nevertheless, over a longer time horizon, there is still substantial credit risk given uncertainty over financing sources to fund a potentially protracted war, and a large recovery effort," the agency says.
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