Standard & Poors lowered its credit rating for Ukraine on Friday to CCC- with a negative outlook, warning that dangerously low foreign currency reserves could prompt a default within months.
"The negative outlook reflects our view of the increasing risk that, without additional financial support, Ukraine may default on its obligations," the credit rating agency said.
Ukraine is embroiled in a war with Russian-backed separatists in its main industrial region and earlier lost control to Russia of the strategic Crimea province.
The government in Kiev has pleaded for international aid to rescue it from economic crisis, but Western creditors are insisting tough reforms, especially in tackling corruption -- measures that have become even harder to achieve in wartime.
S&P said a delay this year in IMF aid, couple with "significantly reduced foreign currency official reserves, increases the risk that the Ukrainian government might not be able to meet its obligations.
"A default could become inevitable in the next few months if circumstances do not change, for instance if additional international financial support is not forthcoming," S&P said.