Fitch confirmed Ukraine’s rating at CC and the hryvnia at CCC-.

Fitch Ratings has confirmed Ukraine’s long-term Issuer Default Rating (IDR) in foreign currency at the CC level, the agency said on its website. The confirmation of Ukraine’s IDR in foreign currency at this level reflects Fitch’s expectations for further restructuring of commercial debt before the end of the two-year break in Eurobond payments in September 2024.

It noted that external sovereign debt service will rise to $7.6B in 2025, a large budget deficit in the medium term will add to already high public debt, and burden-sharing with commercial creditors is a likely condition for continued support of the official sector.

According to Fitch, Ukraine will probably prefer a single comprehensive debt restructuring next year. However, if security uncertainty persists, the agency expects an interim step in further deferral of Eurobond payments.

Also, Fitch confirmed CCC- for the hryvnia. The higher rating than foreign-currency debt reflects greater disincentives to restructure local-currency debt, given only 4% is held by non-residents, with 48% owned by the NBU and 38% by the domestic banking sector, half of which is state-owned.