S&P raises Ukraine’s rating from default after debt restructuring

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S&P Global Ratings raised Ukraine’s credit score out of default as the nation completed a distressed debt restructuring.

The company upgraded Ukraine to CCC+ from selective default with a stable outlook citing a reduction in the government debt service requirements and an expectation of steady international financial support, according to a Friday statement. The score is now five notches above default and on par with Argentina and El Salvador.

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“Our rating action reflects strong committed international financial support to Ukraine, coupled with eroding, albeit still relatively high, foreign exchange reserves,” S&P analysts wrote.

“Ukraine’s debt servicing capacity remains vulnerable and dependent upon favorable financial and economic conditions to meet its financial commitments.”

The upgrade follows a similar action by Fitch Ratings, which took Ukraine out of default on Wednesday, as the Eastern European nation enacts its agreement with creditors to delay debt payments. Moody’s Investors Service rates it at Caa3, the third-lowest score.

Ukraine was downgraded to default scores by both S&P Global Ratings and Fitch on August 12 after investors representing around 75 percent of $19.6 billion worth of the country’s foreign bonds agreed to defer coupon and principal payments until 2024.

An overwhelming majority of bondholders also approved a request to amend the terms of payments on so-called GDP warrants, which are linked to the country’s economic growth.

According to S&P, the government has now amended the respective bond terms and conditions and they have become legally effective.

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