Fitch ratings agency said Tuesday it now considers Ukraine to be in partial default after it failed to make payment on bonds the country has been trying to restructure with its creditors.
"Fitch... judges Ukraine to be in default on its sovereign eurobond obligations" after not having made payment following a 10-day grace period on $500 million in bonds, the agency said in a statement downgrading the country's main credit rating to "restricted default".
Cash-strapped Ukraine has been struggling with its debt since entering a deep economic depression after war broke out with pro-Russian insurgents in its eastern industrial heartland early last year.
It stuck a deal in August to restructure much of its debt, but a small group of private lenders torpedoed the agreement, leading Kiev to launch an exchange offer.
Fitch said it considers the exchange offer for approximately $18bn in direct and government-guaranteed eurobonds to be a "distressed debt exchange under its criteria that results in material losses to bondholders and is being conducted to avoid default."
Rival ratings agency Standard & Poor's similarly declared Ukraine in selective default last month, saying Kiev's offer to creditors would include a 20 percent "haircut" in the money they are owed, and a delay on $11.5 billion in payments on the principal until after 2019.
Fitch said it assumed the debt exchange would be implemented and it would upgrade Ukraine's credit rating shortly thereafter.
Ukraine is supposed to find $15.3 billion in savings as part of a $40 billion global rescue package over the coming four years.