S&P Global revised its issue rating on Ukraine's GDP-linked securities to "D" from "CC" on Tuesday, saying it missed the $665 million payment to holders of its GDP warrants due on June 2.
The Ukraine government said on Friday it would not make the payment, based on 2023 economic performance, but would continue to seek a restructuring of the instrument.
"We do not expect the payment within the securities' contractual grace period of 10 business days, given the government's moratorium on payments on this bond unless it is restructured," ratings agency S&P said.
In S&P's view, the Ukraine government's ability and medium-term incentives to meet its financial commitments in local currency (LC) are somewhat higher than those relating to foreign currency debt.
"A default on these LC obligations would amplify banking sector distress, increasing the likelihood that the government would have to provide the banks with financial support and limiting the benefits of debt relief," it added.
