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Fitch Declares Ukraine In Default After Missed Eurobond Payment

The Fitch ratings agency has declared Ukraine in partial default and downgraded the cash-strapped country after it failed to make payment on bonds it has been trying to renegotiate with creditors.

Fitch declared the partial default on $500 million in eurobond obligations on October 6 after Ukraine did not make payment following a grace period. It then downgraded the country's main credit rating to "restricted default."

Ukraine has been struggling with its debts since entering a deep economic recession after war broke out with pro-Russian insurgents in its eastern industrial heartland early last year.

Ukraine struck a deal in August to restructure much of its debt, but a small group of private lenders torpedoed the agreement, leading Kyiv to launch an exchange offer.

Fitch said the "distressed debt exchange" for $18 billion in eurobonds is designed to avoid default and will harm creditors.

Rival ratings agency Standard & Poor's similarly declared Ukraine in selective default last month, saying Kyiv's offer to creditors would include a 20 percent "haircut" in the money they are owed.

Fitch said it expects the debt exchange to be successful and it will upgrade Ukraine's credit rating shortly afterward.

Based on reporting by AFP and International Business Times