S&P Global Ratings on Thursday downgraded Russia’s debt rating to “CCC-,” citing Western sanctions imposed on Moscow over its invasion of Ukraine that the agency said increased the risk of default.
“The downgrade follows the imposition of measures that we believe will likely substantially increase the risk of default,” S&P said. “Among these are capital controls introduced by authorities that aim at shielding the ruble from the impact of severe economic sanctions while preserving remaining useable reserve buffers.”
The US and the EU have responded with fury to the invasion of Ukraine, sanctioning the Central Bank of Russia (CBR) and banning some of its financial institutions from the SWIFT messaging network used by banks for transferring money.
Photo: EPA-EFE
On Thursday, they announced measures targeting ultra-wealthy Russian oligarchs at the heart of Russian President Vladimir Putin’s regime.
In lowering its credit rating from “BB+” for foreign and “BBB-” for local currency, S&P cited the sanctions against the central bank as particularly damaging because they cut off Moscow’s access to its foreign reserves.
“This has rendered a large part of these reserves inaccessible, undermining the CBR’s ability to act as a lender of last resort and impairing what had been — until recently — Russia’s standout credit strength: its net external liquidity position,” the agency said.
It might lower the rating further, the agency added.
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