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“We also do not anticipate strong international pressure to restructure domestic debt, partly due to additional concerns that this could undermine efforts to revive demand for new government debt issuance,” Fitch stated.
The company expects the war to drag deep into 2023. However, with neither side showing a decisive military superiority, Fitch believes the prospect of a negotiated settlement will become more likely over a longer period. This could take the form of a “frozen conflict” rather than sustainable peace, the agency noted.
Fears that Ukraine would default arose in July 2022, when one of the country's largest state-owned companies, Naftogaz, asked bondholders for a two-year payment freeze on $1.4bn of its bonds. This was followed by the State Automobile Roads Agency (Ukravtodor) and power company Ukrenergo asking to defer bond payments for two years.
As a result, rating agencies downgraded several state companies, including Naftogaz, Ukrenergo and Ferrexpo. The most recent company to suffer is Ukrainian Railways (UZ), which asked its Eurobond owners to postpone all payments, due in 2024 and 2026, for 24 months.
Ukraine is going to need around $750bn for reconstruction, Larry Fink, CEO of BlackRock said at the World Economic Forum in Davos last week.
2.5 Ukraine loses control of Soledar as Russia sees first victory since summer
Ukraine has lost control of Soledar, although fighting is still ongoing in the war-torn Donetsk town, the Kyiv Independent reported on January 22.
The brutal battle for the small mining settlement intensified in the last month as Russian troops and Wagner Group mercenary fighters assaulted the town, losing a chunk of men in the process. Andriy, a Ukrainian unit commander, told the BBC that Ukrainians were killing 50-100 Russians per day.
Russia announced as early as January 10 that the town had fallen, but Ukrainian sources refuted this claim. Although Ukrainian troops are still fighting in the region, experts now agree that the area is under Russian control.
This is Moscow’s first victory after months of humiliation and the first under General Valeriy Gerasimov, who replaced General Sergei Surovikin as commander of the war on January 11. Russia launched constant waves of soldiers which eventually exhausted Ukraine’s defences, according to the Kyiv Independent.
Reports from the battle also suggest that Ukrainian troops are frustrated with poor communication and co-ordination due to the large number of soldiers fighting, with units from fifteen different Ukrainian brigades active in the small area. Others have expressed concerns that this will now put Russia in an advantageous position to capture Bakhmut, the Ukrainian fortress city that has withstood relentless Russian attacks since May 2022.
Nevertheless, the Institute for the Study of War (ISW) stated in its January 10
11 UKRAINE Country Report February 2023 www.intellinews.com