The ratings agency cited the completion in late December of an exchange for US$2.6 billion of Ukraine’s GDP warrants for new and existing bonds.
Ukraine had missed a US$0.67 billion payment in June 2025 on the warrants, said S&P, which lifted its assessment from “selective default” to CCC+/C.
A “small” portion of Ukraine’s commercial debt remains in default, but S&P said Ukraine is engaged in restructuring talks with creditors and that the funds in question represent less than 2.5% of Ukraine’s total outstanding commercial debt.
But S&P said Ukraine’s credit rating – which is deep into the “speculative” category on the firm’s scale – reflects that its financial condition “remains vulnerable and dependent on favourable financial and economic conditions, including the evolution of the war and continued support of its allies.”
S&P noted that EU loans and funding from other G7 countries “roughly correspond to Ukraine’s financing needs in 2026 and 2027.”
“Despite ongoing diplomatic efforts, the terms and timing of a potential ceasefire remain unclear, as Russia and Ukraine strongly disagree on ceasefire preconditions, including border disputes and security guarantees for Ukraine,” S&P said.
“Consequently, in our baseline we assume high-intensity military activity will continue through 2026.”
At the end of 2025, Ukraine reached a new agreement with the International Monetary Fund for more than US$8 billion over five years.
The IMF said that the agreement would “catalyse” enough support to close Ukraine’s financing gap of around US$136.5 billion for 2026-29.