S&P upgrades Ukraine rating from selective default

S&P joined Fitch in upgrading Ukraine’s credit rating on Friday after the war-torn nation last week secured a two-year reprieve on its foreign debt from creditors.

Boosting the country’s credit score of foreign debt to CCC+ “reflects strong committed international financial support to Ukraine, coupled with eroding, albeit still relatively high, foreign exchange reserves,” S&P Global Ratings said in a statement.

“As a result, the near-term risks to the government’s liquidity position and, more broadly, its capacity to honor commercial debt, including in foreign currency, appear manageable.”

But S&P said that is based on the assumptions that donors like the United States and European Union will continue to provide funding to Kyiv in coming months.

A loan agreement with the International Monetary Fund also could ease pressures on Ukraine.

Ratings agency Fitch raised Ukraine’s credit score on Thursday, after both agencies downgraded it to default territory due to the restructuring deal.

However, even with the upgrade S&P warned that “given the ongoing conflict with Russia, Ukraine’s ability to stay current on its debt is highly dependent on factors largely outside of government control.”

The agency projects the country’s economy will contract by 40 percent this year.