Ukraine is no longer considered in default after completing an exchange of securities following a missed 2025 payment, S&P Global Ratings said Thursday, January 22. The ratings agency cited the completion in late December of an exchange for $2.6 billion of Ukraine’s GDP warrants for new and existing bonds.

Ukraine had missed a $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 favorable 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 corresponds 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 (IMF) for more than $8 billion over five years. The IMF said that the agreement would “catalyze” enough support to close Ukraine’s financing gap of around $136.5 billion for 2026-29.