The international rating agency has downgraded Russia’s long-term sovereign credit rating from BB+ to CCC-. The long-term national currency rating was also downgraded from BBB- to CCC-. The ratings are placed on review with a negative outlook due to the increased risk of default.
Agency experts said the new anti-Russian sanctions have halved Russia’s available foreign exchange reserves, including foreign currency deposits and securities registered in the US, EU and Japan. “The downgrade follows the introduction of measures that, in our opinion, will significantly increase the risk of default,” the agency said (quoted from Reuters).
S&P said that the reduction in Russia’s foreign exchange reserves has weakened its external liquidity in a period of growing demand for foreign currency. “Measures (introduced in the Russian Federation.— “b”) on capital controls entail a ban on cross-border financial flows, including debt service payments of both the private sector and the state. We believe that this is likely to limit the ability of non-resident holders of domestic and foreign currency bonds to receive interest and/or principal repayments in a timely manner,” the experts added (quoted from TASS).
Yesterday, March 3, agency Moody’s downgraded Russia’s rating from Baa3 to B3, the agency Fitch – from BBB to B. The second agency believes that the tough sanctions imposed on Russia because of the military operation launched by Vladimir Putin on February 24 in Ukraine pose a threat to the country’s financial stability and may make it unable to service the public debt.
Recall that within the framework of sanctions, Western countries, in particular, froze the assets of the Russian Central Bank. Because of this, the Central Bank raised the key rate to a record 20%. Sanctions led to the collapse of the quotations of Russian assets, the dollar and ruble have already updated their highs several times. CB suspended transfers abroad for foreigners, as well as ordered charge individuals a commission of 30% when buying dollars and euros on the stock exchange.