The financial rating agency has warned that it could further downgrade Russia’s rating because of economic sanctions which increase the risk of non-repayment of its debt.
The financial rating agency S&P Global Ratings has again lowered the rating granted to Russia and warned that it could downgrade it further as the sanctions imposed on the country increase the risk that it will not repay its debt.
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“The military conflict between Russia and Ukraine has triggered a new round of government sanctions by G7 countries, including those targeting the foreign exchange reserves of the Central Bank of Russia,” which were until now an asset in the financial solidity of the country, justified the agency in a press release. “To mitigate the high exchange rate and resulting financial market volatility, and to preserve remaining foreign exchange reserves, the Russian authorities have, among other measures, introduced capital control measures”, says S&P. According to the agency, these checks “could prevent non-resident government bondholders from receiving” scheduled repayments on time.
S&P may downgrade again
S&P had already put Russia’s long-term foreign-currency debt rating in the speculative category last week, but downgraded it another eight notches on Thursday. The other two major rating agencies, Fitch and Moody’s, downgraded Russia to the speculative investment category on Wednesday.
S&P will decide in the coming weeks whether or not to lower Russia’s debt again “once there is more clarity on the government’s technical capacity and/or willingness to honor its debt obligations in full and on time”.