The Standard & Poors (S&P) rating agency has downgraded Ukraine's credit rating to CC, a notch lower than the previous CCC- level, and says the outlook is negative.
The agency said, "We would classify…restructuring of Ukraine's foreign currency debt as tantamount to default."
However, S&P affirmed Ukraine's long-term local currency sovereign credit ratings at CCC+ as well as the short-term foreign and local sovereign credit ratings at C.
Concerning the negative outlook, the ratings agency said it "reflects the deteriorating macroeconomic environment and growing pressure on the financial sector, as well as our view that default on Ukraine's foreign debt is virtually inevitable."
The Ukrainian government has begun negotiations with creditors for $15 billion in debt relief, part of a $40 billion, four-year financial rescue envisioned by the International Monetary Fund (IMF).
But, the IMF has warned, the breakdown of a fragile ceasefire with pro-Russia rebels in the country's east, the failure to reschedule its debt with private lenders, or domestic political issues could all undermine the plan.