"Given the announced terms and conditions of the restructuring, and in line with our criteria, we view the transaction as distressed and tantamount to default," S&P said.
Earlier last week, Ukraine's overseas creditors backed the country's request for a two-year freeze on payments on almost US$20 billion in international bonds. The move will save Ukraine some US$6 billion on payments.
Fitch cut the country's long-term foreign currency rating to "RD" from "C," as it deems the deferral of debt payments as a completion of a distressed debt-exchange.
S&P also said the macroeconomic and fiscal stress stemming from Russia's invasion of Ukraine may weaken the Ukrainian government's ability to stay current on its local currency debt and lowered the Eastern European country's local currency rating to "CCC-plus/C" from "B-minus/B".
Battered by Russia's invasion, which started on February 24, Ukraine faces a 35% to 45% economic contraction in 2022 and a monthly fiscal shortfall of US$5 billion.
It may be recalled that in July Ukraine aimed to strike a deal up to US$20 billion program with the International Monetary Fund (IMF) before year-end to help shore up its war-torn economy, the country's central bank governor Kyrylo Shevchenko had told Reuters.
Shevchenko, speaking during his visit to London, also said he hoped to agree on a swap line with the Bank of England.
It was the first time Ukraine has put a number on the fresh financing it needs from the Washington-based lender. A US$20 billion program would be the second largest currently active loan from the IMF after Argentina.
The central bank chief said a new program should provide measures that will help stabilize the economy. That could ensure a return to pre-war conditions, such as a flexible exchange rate, no limits on the currency market, decreasing non-performing loans in the banking sector and a balanced fiscal policy.
The IMF's latest loan to Ukraine was a US$1.4 billion emergency financing support agreed in March - the equivalent of 50% of the country's quota in the fund.
Separately, Kyiv is now in talks with its international creditors over a freeze in debt payments to ease its liquidity crunch. Lately, Ukrainian energy firm Naftogaz became the country's first government entity to default since the start of the Russian invasion.
"I hope that Naftogaz, together with the ministry of finance of Ukraine, that they will find a solution," said Shevchenko.
Some relief on foreign exchange revenue and liquidity would also come from the deal agreed between Moscow and Kyiv to allow safe passage for grain shipments in and out of Ukrainian ports.
However, those revenues and shipments would only pick up in earnest next year, when under the central bank's "conservative" estimates exports could hit 5 million tons per month and generate approximately US$5 billion in 2023, Shevchenko said.
Speaking about the central bank's intervention in currency markets as well as its bond buying program, Shevchenko said both would continue for now, though the latter would cease as soon as the war ended.
He added that operating in times of war had seen a whole new host of vocabulary spring up, with expressions such as maturity of war - a term to describe the time frame of a debt instrument used in the context of the conflict.
