Russia’s Sovereign Debt Is Downgraded To Junk Status By Fitch And Moody’s

Moody’s reduced Russia’s long-term debt from Baa3 to B3, with a negative outlook, while Fitch dropped its rating from BBB to B, also with a negative outlook.

Fitch and Moody’s downgraded Russia’s sovereign debt to “junk” status on Thursday, a week after Moscow launched its assault on Ukraine.

Moody’s reduced Russia’s long-term debt from Baa3 to B3, with a negative outlook, while Fitch dropped its rating from BBB to B, also with a negative outlook.

“The multi-notch lowering of Russia’s ratings and the continuation of the review for further downgrading were sparked by the severe sanctions imposed by Western countries on Russia,” Moody’s said in a statement.

Additionally, the agency observed a “heightened risk of interruption” in the repayment of sovereign debt in the face of “strong and coordinated penalties.”

It stated that there were “serious doubts” about Russia’s ability to service its debt.

The European Union cut seven Russian banks off from the worldwide SWIFT interbank messaging network on Wednesday, a network that enables speedy and secure transactions.

Additionally, the World Bank said that it would cease all active investments in Russia and Belarus in response to Ukraine’s invasion.

Fitch, for its part, stated that it anticipates a “further escalation of sanctions against Russian banks.”

It noted that in the event of prolonged warfare and sluggish economic growth, it foresaw the possibility of “more domestic political uncertainty and instability.”