The financial rating agency Moody’s Investors Service lowered Russia’s credit rating from B3 to CA on Sunday with a negative outlook. The new category that the country enters is the second lowest rung on its scoring scale.
The downgrade “is therefore driven by serious concerns about Russia’s willingness and ability to service its debt obligations,” Moody’s said in a statement.
“Moody’s view is that the risk of a default occurring has increased significantly and that the likely recovery for investors will be in line with the historical average, consistent with a Ca rating.” Recovery expectations are at 35% to 65%, he added.
The decision is supported by a statement from the National Settlement Depository that coupon payments on the OFZ government bonds, due March 2, have only been paid to local holders of the papers, Moody’s noted.
Moody’s and its peer rating agencies Fitch and S%P Global had rated Russia at investment grade levels of Baa3/BBB on March 1. Since then, all three have slashed their scores several notches, putting the ruler in “junk” territory.
The crisis that has engulfed the Russian economy is the result of harsh sanctions imposed by the West, including the freezing of central bank assets abroad and the separation of several Russian banks from international payment systems SWIFT.
With information from Bloomberg and Reuters
Source: Larepublica
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