LONDON — Credit rating firms Fitch and Scope downgraded Ukraine on Friday two days after the war-ravaged country requested a debt payment freeze.
Both firms cut the country’s long-term foreign-currency rating to a ‘C’ grade – just one step from default – with both also signaling that a default now looked likely.
A “default-like process has begun” Fitch said referring to Kyiv’s ‘consent solicitation’ request for a two-year deferral on its $20 billion-plus stock of international debt.
“The rating would be downgraded to ‘restricted default’ and the affected instruments to ‘D’ following the consent solicitation “effective date” should it be accepted, which we view as likely,” Fitch added.
Scope said its rating would also possibly be revised to “selective default” the equivalent of restricted default.
Fitch forecasts the damage of Russia’s invasion will see Ukraine’s economy contract by a third this year. That will leave it with fiscal shortfall of almost 30% of its annual economic output and ramp its debt-to-GDP ratio up nearly 50 percentage points to 92%. (Reporting by Marc Jones in London, Nandhini Srinivasan and Richard Rohan Francis in Bengaluru; Editing by Devika Syamnath and Marguerita Choy)