Fitch upgrades Ukraine’s local-currency rating to ‘CCC+’ after debt restructuring

(Reuters) -Ratings agency Fitch on Thursday upgraded Ukraine’s long-term local-currency rating to ‘CCC+’ from ‘CCC-‘, after the war-torn country restructured over $20 billion in debt to ensure budget stability amid elevated military spending.

It is the second restructuring in a decade for the country. The previous one was in 2015 following the annexation of Crimea.

Fitch now forecasts Ukraine’s 2024 general government debt at 89.6% of gross domestic product, down from its prior projection of 92.5%.

The International Monetary Fund has also begun the fifth review of its lending programme to Ukraine which, if successful, would help the country secure $1.1 billion in new financing in the coming months.

The funding will reduce risks to Ukraine’s macroeconomic and financial stability in the near term, the agency said.

It, however, added that prolonged war, rising fiscal deficits and financing uncertainty in 2025 could mean substantial credit risk for the country.

The agency also said the debt restructuring constitutes only a part of Ukraine’s ongoing restructuring episode and affirmed its long-term foreign-currency rating at ‘restricted default’.