Fitch confirms Ukraine at 'Restricted Default' as GDP warrant talks fail

On November 14, Fitch Ratings affirmed Ukraine's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'Restricted Default' (RD) for the third consecutive time. The agency reported this on its website.

"Fitch considers that Ukraine remains in a broader restructuring process. The Long-Term Foreign-Currency IDR will remain at 'Restricted Default' until Ukraine has normalised its relations with a significant majority of external commercial creditors. This will be the case once Fitch assesses that the restructuring of GDP warrants has become a protracted dispute that no longer restricts relations with other commercial bondholders, or once a restructuring agreement is reached with the remaining debt holders," Fitch stated.

Ukraine has not yet reached an agreement with the holders of the 2015 GDP-linked securities, also known as GDP warrants. On June 2, 2025, Ukraine missed a USD 665 million payment on USD 2.6 billion of these warrants, and the 10-day grace period expired without payment. A second round of negotiations at the beginning of November also failed, reflecting continued broad disagreement on the terms of exchange.

According to the Ministry of Finance, between October 16 and November 5, Ukraine held restricted discussions with members of the Ad Hoc Committee, comprised of institutional holders of the GDP warrants, to propose a restructuring.

Ukraine proposed an exchange of the warrants for new Eurobonds ("C Bonds") with the following terms:

→ Exchange ratio of 1.26;
→ Soft amortizing maturities in 2030–2032;
→ Step-up coupon starting at 2.5% and increasing to 6.0% by 2030;
→ Cash component of 6 cents per dollar (including 1 cent consent fee);
→ Loss reinstatement provision to protect against a potential second restructuring.

The Ad Hoc Committee’s counterproposal was deemed unacceptable by Ukraine:

→ Significantly higher coupon levels (5–7.75%);
→ Shorter maturities, with first substantial amortization in 2029;
→ Substantial increase in debt stock.

The Ministry of Finance said that investors’ proposal would threaten Ukraine’s long-term debt sustainability.

"Because of the lack of meaningful progress on economics, Ukraine indicated that it could not accept the Ad Hoc Committee’s final proposal and declined to make any further proposal to the Ad Hoc Committee before the end of the Restricted Period," the Ministry said in a statement.

• In addition to the USD 2.6 billion GDP warrants, Ukraine still needs to finalize the restructuring of Ukrenergo’s USD 825 million state-guaranteed Eurobonds (preliminary agreement reached in April, completion expected in early 2026) and Cargill’s USD 0.7 billion commercial loan. The main restructuring of external commercial debt, totaling USD 20.5 billion (78% of commercial external debt), was completed in September 2024.
• Fitch initially downgraded Ukraine’s credit rating to 'RD' in August 2024 after the state began restructuring Eurobonds.