International rating agencies Fitch and Standard & Poor’s have downgraded Ukraine’s ratings in foreign currency, after the country managed to defer payments on its external debt.

Fitch downgraded Ukraine’s long-term foreign currency rating to restricted default (RD), and S & P downgraded to selective default; (SD) as they consider the country’s debt restructuring as distressed.

“Given the announced terms of the restructuring and in accordance with our criteria, we view the deal as problematic and tantamount to a default,” S & P announced.

On August 10, the Ministry of Finance of Ukraine announced that overseas creditors backed the country’s request to freeze until 2024 the country’s payments on Eurobonds, which account for 75% of Ukraine’s external debt.

According to Bloomberg, Ukraine’s total external debt is $19.6 billion. Postponing payments will help Kyiv save about $6.0 billion, Prime Minister Denys Shmyhal has said.

S & P also said the macroeconomic and fiscal stress stemming from Russia’s invasion of Ukraine may weaken the Ukrainian government’s ability to stay current on its local currency debt and lowered the Eastern European country’s local currency rating to CCC-plus/C from B-minus/B.

Battered by Russia’s invasion, which started on Feb. 24, Ukraine faces a 35%-45% economic contraction in 2022 and a monthly fiscal shortfall of $5 billion.

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