Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for Ukraine (long-term issuer rating in foreign currency: SD; long-term senior unsecured debt rating in foreign currency: SD; long-term issuer and senior unsecured debt ratings in local currency: CCC/ Stable Outlook; short-term issuer ratings in local- and foreign-currency: S-4/ Stable Outlook) on 5 May 2025.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

Ukraine’s long-term issuer rating in foreign currency of SD reflects the ongoing negotiations to restructure external commercial claims other than Eurobonds: i) GDP-linked securities (outstanding USD 3.2bn) with the next payment due on 31 May 2025; ii) Ukrenergo sustainability-linked bonds (USD 0.8bn) with payment suspended from 9 November 2024; and iii) commercial loans from the American-corporate Cargill with payment suspended from 3 September 2024. Ukraine introduced a payment moratoria on 27 August 2024 until the treatment of all those external commercial claims part of the authorities’ debt restructuring strategy is clarified. In April 2025, Ukrenergo reached an agreement for a liability management exercise on its sustainability-linked bonds that is expected to be completed by early July 2025.

In March 2025, the IMF approved the completion of the seventh review under the Extended Fund Facility (EFF), enabling the disbursement of USD 0.4bn. This reflects a credible ongoing restructuring process and the commitment from the authorities to restructure external commercial claims other than Eurobonds. Restoring Ukraine’s long-term debt sustainability requires reaching restructuring terms compatible with IMF debt restructuring targets (e.g., publicly-guaranteed debt excluding Extraordinary Revenue Acceleration loans – ERA) of 82% of GDP by 2028 and 65% by 2033. Progress on the IMF programme was also driven by the G7’s ERA loans (USD 50bn), of which USD 13.6bn was disbursed.

Ukraine’s CCC ratings with Negative Outlook on Eurobond securities issued in 2024 reflect the commitment from the authorities to undertake a further external commercial debt treatment as needed. A second-stage restructuring could occur due to, for example, any scenario of extended conflict, lower-than-expected fiscal structural reforms and/or concessional financing, and/or restructuring terms on external claims incompatible with debt restructuring targets. Any such debt operation could occur by the penultimate review of the IMF EFF (around the second half of 2026) or when current exceptionally-high uncertainty subsides, possibly alongside a definitive treatment of official bilateral debt.

Ukraine’s restructuring strategy excludes domestic debt that is mainly due to the National Bank of Ukraine and domestic banks.

There is no Outlook assigned on the long-term issuer rating in foreign currency in selective default.

The upside scenario for the long-term issuer rating in foreign currency is:

1. External commercial debt restructurings are completed and/or debt-servicing moratoria are lifted on select external commercial claims.

The Negative Outlook on Eurobond securities represents the risk of a second-stage restructuring within the scope of the IMF programme until 2027.

The downside scenario for the Eurobond ratings is if the restructuring of Eurobond securities rises in likelihood, nears in timing and/or sees the likelihood of higher-than-assumed losses.

The upside scenario for the Eurobond rating Outlook is if the debt-sustainability outlook in the future reduces the case for second-stage restructuring of the securities.

The Stable Outlook on the domestic debt ratings represents the consideration that risks for the ratings are balanced.

The downside scenario for the domestic debt ratings and Outlooks is if:

1. The likelihood of re-profiling of the domestic debt increases, such as under a scenario of debt-sustainability remaining impaired even after comprehensive external liability restructuring.

Upside scenarios for the domestic debt ratings and Outlooks are if (individually or collectively):

1. The government’s debt-sustainability outlook meaningfully improves;
    
2. Security risks are significantly reduced.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Thomas Gillet, Director

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