Fitch, Moody downgrades Russia's sovereign rating to 'junk'
According to the news agency Reuters, Fitch and Moody's downgraded Russia's sovereign credit rating by six notches to "junk" status, citing worries about Russia's capacity to service its debt and the deterioration of its economy as a result of Western sanctions.
FollowRussia's military operation in Ukraine provoked economic penalties and a downgrade of Russia's sovereign credit rating by rating firms Fitch and Moody's on Wednesday.
According to the news agency Reuters, Fitch and Moody's downgraded Russia's sovereign credit rating by six notches to "junk" status, citing worries about Russia's capacity to service its debt and the deterioration of its economy as a result of Western sanctions.
Russia's financial markets have been in upheaval since the West imposed sanctions following the start of the military action in Ukraine. Russia responded by fortifying its economic defences and retaliating against Western sanctions. It has hiked the primary lending rate to 20%, barred Russian brokers from selling stocks owned by foreigners, urged exporting enterprises to support the rouble and stated that foreign investors would be barred from selling assets.
According to Reuters, "the severity of international sanctions in reaction to Russia's military invasion of Ukraine has heightened macro-financial stability concerns, constitutes a severe shock to Russia's credit fundamentals, and might impair Russia's readiness to pay government debt."
The rating agency also stated that the sanctions imposed by Western nations would significantly reduce Russia's GDP growth potential in comparison to the ratings agency's prior estimate of 1.6 per cent.
"The sanctions may potentially have an impact on Russia's propensity to repay debt," Fitch said. Moody's, on the other hand, stated that the sanctions' extent and severity "have gone beyond Moody's early estimates and would have substantial rating repercussions." The invasion has resulted in a flurry of credit rating changes and gloomy predictions about the damage to Russia's economy. Russia's credit rating was downgraded to junk status by S&P last week.
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