(Reuters) - Fitch downgraded Ukraine's credit rating further into default territory at "C" from "CC" on Wednesday, citing a recently concluded in-principle agreement with a group of creditors to restructure $20 billion of international bonds.
A "C" rating indicates Fitch's view that a default or default-like process for Ukraine has begun.
On Monday, Ukraine said it had reached an agreement in principle with a group of creditors to restructure $20 billion of international bonds, bringing the war-torn country closer to an unprecedented debt rework.
The proposal provided a 37% nominal haircut on Ukraine's outstanding international bonds, saving Kyiv $11.4 billion in payments over the next three years.
"The reported agreement with external commercial creditors constitutes a distressed debt exchange (DDE) under its sovereign rating criteria," Fitch said, adding that it involves a material reduction in terms and extension of maturities.
Ukraine's finances are precarious as its 28-month war with Russia drags on. Russia's 2022 invasion decimated its economy, leaving it heavily reliant on money – and military aid – from international partners.