The purpose of the research is to identify the influence of Ukraine’s economic development on the international agencies' credit rating of its banking system. The instability and ambiguous geopolitical position of Ukraine are complicating any predictions for its economic developments. In the meanwhile, massive restructuring of all sectors of the economy became the necessary minimum for the reformation of the country and the achievement of the international standards. It is interesting to see how exactly these international standards, as represented by the evaluation of the rating agencies, appraise Ukraine, and particularly its banking sector. The methodology involves the analysis of the three major Ukrainian banks – PrivatBank, Oschadbank, and Ukreximbank using Fitch’s credit quality assessment systematic as an example. The comparative analysis was performed using Tier 1 capital ratio and loan-to-deposit ratio of these banks, year-to-year quarterly GDP growth, consumer price index (CPI) year-to-year change, UAH/USD exchange rate, 2-year and 5-year government bond yield, as well as 2-year and 5-year credit default swap (CDS). Results show that the most influential credit rating drivers for Ukrainian banks are: exchange rate; funding and liquidity; capital position and asset quality; sovereign risk. The research showed that the 2-year and 5-year government bond yield in USD and 2-year and 5-year CDS were influenced by similar trends. The yield on short-dated Ukrainian governmental bonds has shown a parallel increase with the corresponding CDS that indicated the market’s evaluation of the stressed condition of the country’s government and economy. Additionally, conventional yield structures displayed inversed nature with 2-year governmental bond yield in USD trading at significantly higher yields than 5-year government bond yield in USD during times of economic distress. Although longer maturity instruments should usually trade at a higher rate, such a development could have reflected the public markets’ scepticism to the Ukrainian government’s short-term solvency. The closer look at the Tier 1 capital ratio, which is considered to be a key indicator of the financial health of the banks, revealed analogy between it and three major Ukrainian banks rating development, indicating the Tier 1 capital ratio as a strong influencing factor. Loan-to-deposit ratio as an indicator of bank liquidity moved in parallel with decreasing credit ratings. The strong decrease in the UAH/USD exchange rate mirrored a strong increase in inflation and overall worsening state of the Ukrainian economy also being reflected in the major banks’ ratings. Practical implications. The correlation of these factors is relevant for bank managers and investors who can use financial market indicators to forecast and plan their own ability to conduct business. Likewise, academic researchers can further build on this study to add to the literature on country-specific reviews of sovereign debt crises and their impact on national banking systems. Value/originality. This research demonstrates that a worsening of financial indicators of the health of Ukraine’s financial system as measured by government bond yields and the trading of credit default swaps, as well as the country’s economic downturn, go along with a decline of local banks’ credit ratings.