KYIV, Aug 13 — Global rating agencies S&P and Fitch yesterday lowered Ukraine’s foreign currency ratings to selective default and restricted default as they consider the country’s debt restructuring as distressed.

Earlier this week, Ukraine’s overseas creditors backed the country’s request for a two-year freeze on payments on almost US$20 billion (RM88 billion) in international bonds. The move will save Ukraine some US$6 billion on payments according to Prime Minister Denys Shmyhal.

S&P lowered Ukraine’s foreign currency rating to "SD/SD” from "CC/C.”

"Given the announced terms and conditions of the restructuring, and in line with our criteria, we view the transaction as distressed and tantamount to default,” S&P said.

Fitch cut the country’s long-term foreign currency rating to "RD” from "C,” as it deems the deferral of debt payments as a completion of a distressed debt-exchange.

S&P also said the macroeconomic and fiscal stress stemming from Russia’s invasion of Ukraine may weaken the Ukrainian government’s ability to stay current on its local currency debt and lowered the Eastern European country’s local currency rating to "CCC-plus/C” from "B-minus/B”.

Battered by Russia’s invasion, which started on February 24, Ukraine faces a 35 per cent-45 per cent economic contraction in 2022 and a monthly fiscal shortfall of US$5 billion. — Reuters