"Ukraine, Default Virtually Certain"… S&P Downgrades Credit Rating by 3 Levels

Volodymyr Zelenskyy, President of Ukraine
[Photo by AFP Yonhap News]

[Asia Economy Reporter Donghoon Jeong] The international credit rating agency Standard & Poor's (S&P) downgraded Ukraine's credit rating on the 29th (local time) due to concerns over default.

In a statement on the same day, S&P announced that it had lowered Ukraine's long-term sovereign bond rating by three notches from CCC+ to CC. Both CCC+ and CC are non-investment grade ratings indicating a possibility of default, but CC reflects a very high risk of default.

S&P explained the reason for the downgrade by stating that Ukraine's recent plan to defer overseas bond repayments and interest payments for 24 months "effectively means default is almost certain." The rating outlook was maintained as 'negative,' indicating that the rating could be further downgraded in the future.

S&P stated, "Our assessment reflects the likelihood that Ukraine will implement a debt restructuring plan, which is tantamount to default."

The Ukrainian government had previously announced on the 20th that it would defer Eurobond repayments and interest payments for 24 months starting from the 1st of next month. Additionally, it plans to postpone GDP-linked guarantee payments from May 2023 to August 2024.

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