Fitch Ratings has upgraded Ukraine's credit rating from "limited default" to "substantial." Importantly, the decision came after the country announced its creditors' agreement to swap its growth-linked debt for conventional bonds.
Points of attention
- This is another important step to strengthen Ukraine's debt sustainability.
- Ukraine's GDP shrank by almost 30% in 2022 due to Russia's full-scale invasion.
Fitch rates Ukraine at CCC
As economists point out, this is a level that is eight steps below the investment level.
Fitch rated the new bonds one notch higher, reflecting better protections for creditors.
In addition, it is noted that the conversion proposal was supported by 99% of the owners of the so-called GDP warrants.
They will exchange securities worth nearly $2.6 billion for bonds worth $3.5 billion.
The rating upgrade reflects Fitch's assessment that Ukraine has normalized relations with the vast majority of external commercial creditors, the official statement said.
Recently, the Ministry of Finance of Ukraine officially confirmed that owners of government derivatives tied to GDP (GDP warrants), which are in circulation for a total amount of $2.6 billion, participated in an exchange offer, which provides for the full exchange of GDP warrants for ordinary debt securities of Ukraine.
