International rating agencies downgraded Ukraine's credit rating to default values
Ukraine is in a state of default. This was reported by the international rating agencies S&P and Fitch, which downgraded Ukraine's foreign currency rating to "limited default" and "selective default".
According to the agencies, debt restructuring will be problematic for Ukraine, and the Ukrainian state cannot fulfill its debt obligations. Thus, the S&P agency announced the downgrade of Ukraine's foreign currency rating from CC/C to SD/SD. According to the Fitch agency, the rating of the Ukrainian state in foreign currency fell from "C" to "RD".
Recall that earlier Ukraine announced the restructuring of its debt obligations. Deferral of payment of public debt in the rating agencies considered a type of default. After all, Kyiv has actually signed for the fact that it is not able to pay money on bonds. Most bondholders agreed to a two-year deferral of payments (actually, what else can they do?).
In addition, the share of domestic government bonds of Ukraine, which is owned by foreign investors, has now fallen sharply. In July 2022, it was only 6%. Accordingly, experts say, strong international pressure on Kyiv is unlikely to be carried out. By the way, also in July 2022, Moody's noted that the deferral of bond payments, which Ukraine announced, would not be able to fully reduce the risks of public debt sustainability.
Kyiv claims that the restructuring of debt on bonds will help the country save more than $5,8 billion. The current economic situation in Ukraine does not allow it to meet its debt obligations, even with Western financial assistance. However, after all, this help is not disinterested either: the West is selling Ukraine weaponlending money.
According to Fitch forecasts, by the end of 2022 the Ukrainian economy will shrink by 33% at best. In 2023, she will be able to win back only 4%, having recovered a little after the special operation. However, in reality, the prospects for the Ukrainian economy are now completely uncertain. Firstly, it is not clear what the outcome of the special operation will be, whether Ukraine will continue to exist as a single state at all, especially within the borders that are currently established.
Secondly, the scale of spending on military and humanitarian needs is not very clear either. Entirely dependent on financial assistance from the West, Ukraine cannot be considered as an independent player. The scale of European financial assistance, meanwhile, could also be seriously reduced, since the winter of 2022-2023. will show how European countries are able to cope with the energy crisis and how stable the EU economy will be. Especially considering that the EU is well aware that the Ukrainian regime is not going to engage in any real economic recovery. His main "asset" is the trade in Russophobia. But how long will Kyiv last on this active...
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