Moody’s lowered Russia’s rating even more

The international rating agency Moody’s, which this week has already downgraded the long-term ratings of the Russian Federation on debt obligations in foreign and national currencies by six steps at once – to “B3” from “Baa3”, continued to worsen Russia’s credit rating, Interfax reports.

The rating has now been downgraded from ‘B3’ to ‘Ca’ amid concerns that capital controls imposed by the Russian Central Bank will hinder the servicing of sovereign debt to foreign investors.

It should be noted that on March 3, the international rating agency Fitch Ratings sharply – by six steps at once – lowered Russia’s long-term sovereign rating in foreign currency – from “BBB” (investment category) to “B” (highly speculative category), which means a significant probability of default. And now Russia’s rating from Fitch is on a par with the Belarusian one. Libya, Mongolia, Nigeria have the same rating.

On the same day, Moody’s, in response to sanctions pressure on Russia in connection with its military operation in Ukraine, also downgraded Russia’s long-term foreign and national currency debt ratings by six notches to B3 from Baa3.

And on March 4, the international rating agency S&P Global Ratings (S&P) lowered its long-term sovereign credit rating of the Russian Federation in foreign currency from BBB- to CCC-, as well as the long-term rating in national currency.

We also recall that on February 21, 2022, Russian President Vladimir Putin signed decrees recognizing the independence of the self-proclaimed Donetsk and Luhansk People’s Republics (DPR and LPR), and on February 24 he made an urgent appeal to the Russians and announced a special military operation in Donbass. In his speech, he stated that “circumstances require decisive action from Russia” and stressed that “Russia will not allow Ukraine to have nuclear weapons.”

In response to Russia’s actions, Western countries (USA, Canada, European Union, Great Britain, Japan) announced new, tougher sanctions against the Russian Federation, including financial and economic ones.

In particular, Russian banks fell under the sanctions, including Sberbank, VTB, Novikombank, FC Otkritie and Sovcombank, and for a number of state-owned companies it was difficult to attract foreign capital.

Later, the EU countries and the United States agreed to disconnect Russian banks that fell under sanctions from the international system of interbank transactions and information exchange SWIFT. In addition, it was decided to freeze the assets of the Bank of Russia, which will create difficulties for its use of international reserves. EU countries also pledged to take steps to limit the sale of citizenship — the so-called “golden passports” that allow wealthy Russians connected to the Russian government to become citizens of EU states and gain access to their financial systems.

You can follow the chronicle of events around Ukraine here.