Ratings agency Fitch removed its "partial default" rating for Ukraine Wednesday after the country completed its bond restructuring deal and resumed servicing its debts.
Fitch upgraded its rating to a still basement-level CCC, noting that the restructuring, agreed to in August but only completed last week, had allowed Kiev to issue new bonds against those defaulted on in October in a move to make the country's finances more sustainable.
The restructuring lengthens the payment period on Ukraine's massive debt and was a crucial component of the International Monetary Fund's $17.5 billion financial rescue of the country agreed to in March.
"Public debt sustainability has improved," Fitch said.
"Reduced refinancing needs and a pipeline of official financing give the public and external finances some breathing room and lower the risk of a sovereign debt crisis over the short- to medium-term."
Kiev still has to resolve a $3 billion debt dispute with Moscow, which could threaten the overall program.
Moscow has insisted that Ukraine repay by December the loans Russia made to then-president Viktor Yanukovych ahead of his ouster in February 2014.
On Monday, Russia said it has a new proposal on how to resolve the dispute, but gave no details.
Last week, Ukrainian Prime Minister Arseniy Yatsenyuk reiterated that Kiev would not offer Moscow "better conditions" than to private creditors.