Fitch downgrades Russia’s sovereign rating by 6 notch “high risk”

Rating agency Fitch slashed Russia’s sovereign rating by 6 notches to junk on Wednesday, saying Western sanctions for the invasion of Ukraine made Russia’s ability to service its debt and weaken its economy uncertain. in a “huge shock” to its solvency.

Russian financial markets have been shocked by his attack on Ukraine, the largest military offensive in Europe from the Second World War, and from harsh Western sanctions.

The invasion sparked warnings of the impact on the Russian economy. Last week, Standard & Poor’s also downgraded Russia’s rating to junk and Moody’s put the country under scrutiny for a downgrade.

The Institute of International Finance expects a double-digit contraction in its economic growth quest’year.

Fitch downgraded Russia’s rating from BBB to B and put it under “negative rating”, according to “Reuters”.

“The severity of international sanctions in Russia’s response to the military invasion of Ukraine has increased risks to macro-financial stability, represents a huge shock to Russia’s credit fundamentals and could undermine its willingness to serve public debt, “it reads. in a relationship.

Fitch added that US and EU sanctions banning any transactions with the Russian Central Bank would have “a far greater impact on Russia’s credit fundamentals than any previous sanctions,” rendering much of Moscow’s international reserves unusable for currency exchange interventions.

Doubts about the ability to repay the debt

And Fitch warned that “sanctions could put pressure on Russia’s willingness to repay the debt.”

“President Putin’s response to the mass in nuclear warnings appear to reduce the likelihood of Ukraine changing course to the extent necessary to reverse the impact of the rapid tightening of sanctions, “he added.

Fitch said he expected sanctions against Russian banks to escalate further.

The agency warned that sanctions imposed by Western countries will significantly weaken the growth potential of Russia’s gross domestic product compared to the agency’s previous assessment of 1.6% growth.

Moody’s downgrades the rating

Analysts at JPMorgan and others warned Wednesday that sanctions against Russia have dramatically increased the chances of it going. in default on its dollar and other public debts on the international market.

In a related context, rating agency Moody’s said Thursday that it downgraded Russia’s long-term unsecured credit rating from Baa3 to B3, attributing this to severe sanctions imposed by Western countries on Moscow.

The agency added that the ratings are still in under review for a further downgrade.

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