The FINANCIAL — Moody’s Investors Service on Friday downgraded Russia’s debt one notch to Baa2, citing the country’s fiscal uncertainty due to the Ukraine crisis and the expanded international sanctions stemming from that conflict, according to Dow Jones & Company, Inc.
The downgrade puts the country’s rating two notches above junk status–and brings Moody’s rating in line with those of the other two major ratings firms, Standard & Poor’s and Fitch Ratings.
Moody’s outlook remains negative, which signals possible further downgrades, according to Dow Jones & Company, Inc.
The military confrontation in neighboring Ukraine and escalating sanctions against Russia are likely to have an increasingly negative impact, the rating firm said. Consumer and investor confidence have already taken a toll, it added, noting that it expects real growth to decline by year’s end and into at least mid-2015.
“The longer the conflict in Ukraine and sanctions against Russia last, the more significant will be the damage to investors’ confidence in Russia,” the firm said.
Further, the country is already experiencing capital flight due to international market access restrictions on Russian borrowers, the firm noted, adding the Russian government and Russian-based companies have been largely “shut out” of the international markets since the second quarter.
The ratings agency added that the nation, a top crude and natural gas producer, also is suffering from low oil prices and depends on energy exports for about half of its federal budget reserves, according to Dow Jones & Company, Inc.
Discussion about this post