Business & Economy

Fitch cuts Russia’s rating, sees debt default imminent

London, March 9 (EFE).- Fitch has downgraded Russia’s long-term foreign currency sovereign debt rating to “C” from “B,” predicting an “imminent” amid international sanctions and trade restrictions following the Ukraine war.

The new rating follows Fitch’s downgrade on Mar.2.

“Developments since then have, in our view, further undermined Russia’s willingness to service government debt,” the rating agency said in a statement late Tuesday, referring to the sanctions imposed on Russia for its military invasion of Ukraine on Feb.24.

The agency said the further ratcheting-up of sanctions and proposals that might limit energy trade increased the probability of a Russian policy response.

It might include at least selective non-payment of its sovereign debt obligations, said the statement.

“The risk of imposition of technical barriers to servicing debt, including through the direct blocking of transfer of funds, or through clearing and settlement systems, have also risen somewhat since our last review.”

The agency said the application of Central Bank of Russia regulation had restricted the transfer of local-currency OFZ debt coupons to non-residents since late last week.

The lowering of the Country Ceiling to “B-” reflected the expected impact of capital controls in impeding transfer and convertibility, said Fitch.

“The differential to the Long-Term IDRs is due to the potential for a degree of selective enforcement of capital controls or the potential ability for some entities to make payments.”

The Russian Central Bank Wednesday limited the maximum that a client can withdraw in foreign currency in cash in their foreign exchange accounts to $10,000, Sputnik news agency reported.

“A client can withdraw up to $10,000 in foreign currency in cash, and the rest of the funds in ruble, depending on the market exchange rate on the day of withdrawal,” the Russian issuer’s statement said. EFE


Related Articles

Back to top button