Ukraine’s CC foreign-currency issuer ratings reflect expectation of debt treatment by 2024, for meeting the external financing gap. The revision of the Outlook on domestic debt to Stable reflects reduced likelihood of restructuring of domestic debt.

Foreign debt restructuring drives the sovereign credit rating downgrade to selective default (SD).

Severe recession, potential of debt restructuring, and weakening of external sector underscore Negative Outlook. Significant international funding and political support, and pre-crisis improvement of economic framework, underpin ratings.

Russia’s military invasion of Ukraine and associated severe credit implications drive the rating downgrade. Uncertainties surrounding evolution of the conflict and ongoing weakening of credit fundamentals drive rating review.

Improvements of economic policy framework, reserve build-up, reduction in public debt and multilateral support abet ratings*. Elevated geopolitical risk, high external financing needs, restricted market access and record of default reflect challenges.