Moody’s Investors Service cut Ukraine’s credit rating to the second-lowest score, citing “long-lasting challenges” to its economy and public finances from the war with Russia.
(Bloomberg) — Moody’s Investors Service cut Ukraine’s credit rating to the second-lowest score, citing “long-lasting challenges” to its economy and public finances from the war with Russia.
The agency now rates Ukraine one notch lower at Ca, on par with Argentina. Moody’s also changed the outlook to stable from negative, according to a statement Friday.
“These challenges increase risks to government debt sustainability, making a debt restructuring with significant losses for private-sector creditors very likely,” analysts wrote. “The stable outlook reflects balanced risks at the Ca rating level, which is consistent with a recovery in the event of default typically in the order of 35 to 65%.”
Both S&P Ratings and Fitch Ratings lifted the nation’s credit score from default in August after it enacted an agreement with creditors to delay debt payments. Fitch rates Ukraine as CC, two notches above default, while S&P has it three levels higher with a stable outlook.
Bondholders agreed in August to defer about $6 billion in sovereign principal and interest payments for two years amid war-related spending needs. An overwhelming majority of bondholders also approved a request to amend the terms of payments on so-called GDP warrants, which are linked to the country’s economic growth.
Ukraine has about $23 billion outstanding in international bonds, according to data compiled by Bloomberg. Last year, the nation’s dollar bonds were the worst performers in the world, handing investors losses of 77%, according to a Bloomberg index.
–With assistance from Sydney Maki.
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