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Russia’s credit ratings are considered speculative investment

Russia’s credit ratings are considered speculative investment

A week after the invasion of Ukraine, Russia entered the category of countries at risk of not being able to pay their debts, according to the financial rating agencies Fitch and Moody’s.

Thus, both credit rating companies lowered their assessment of Russia by six notches, Moody’s downgraded its long-term debt rating from Baa3 to B3 and says it will continue to monitor amid Western sanctions on Russia, while Fitch downgraded it from BBB to B, with a negative outlook.

The ratings put Russia in the speculative investment category and will make it difficult for the country to finance itself. “Russia’s downgrade by several notches and continued scrutiny (…) was triggered by the heavy sanctions that Western countries imposed on Russia,” in particular, against the central bank and large financial institutions, in response to the military invasion of Russia. Ukraine, Moody’s said in a statement.

For its part, Fitch warned that sanctions on Russian banks are likely to intensify if the conflict continues. He also indicated that Western sanctions, in addition to the large fall in the ruble, “notably increase the risk of a general loss of internal confidence that triggers the outflow of bank deposits and dollarization.”

“The severity of the sanctions … represents a major impact on Russia’s credit fundamentals and could undermine its willingness to pay its sovereign debt,” he added.

Last week, the S&P rating agency had already lowered Russia’s rating, also moving it to the speculative category due to the greater risk of sanctions.

Source: Larepublica

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