OREANDA-NEWS. National Rating Agency has lowered its sovereign rating on Ukraine to 'iSD'.

Currently Ukraine is suffering a systemic economic crisis, accompanied by the real economy contraction, rising inflation, national currency devaluation, widening fiscal deficit, and growing government debt. The economic and financial crises are aggravated by the military and political conflict in some parts of Donetsk and Luhansk regions. These areas with a large resource potential are currently out of the Ukrainian Government's control.

In order to carry out current payments and maintain fiscal sustainability, the Government of Ukraine requires a steady financial support from international financial institutions and foreign states. External financial support is also essential to meet the obligations of external liabilities of the government and state-owned corporations.

In August 2015 Ukraine has agreed with a group of creditors to write off 20% (\\$3.8 billion) of the country's debt principal on Eurobonds and to restructure the remaining public debt. At the same time, some holders of Ukrainian bonds, who have a blocking stake, were dissatisfied with this agreements and did not exclude the possibility of protesting against the proposed conditions. NRA considers the event as an attempt to avoid a default.

From September 23, 2015, Ukraine has suspended repayment and service of the public debt. The default is tolerated on government securities issued from 2005 to 2013, including the \\$500 million issue with a maturity of September 23.

NRA believes that the current financial and economic situation in Ukraine is characterized by a high level of uncertainty. In the short term, the creditworthiness and financial stability of the government depend on the possibility of reaching agreements on debt restructuring.