Credit rating agency Fitch downgraded Russia’s debt again on Tuesday, saying its decision reflected analysts’ view that Moscow’s risk of default was “immediate.”
Like the other two so-called “big” rating agencies (S&P Global Ratings and Moody’s), Fitch had already placed Russia’s long-term debt in early March in the category of those who may cease to be serviced, in the midst of a series of financial sanctions. from the West to Moscow due to the Russian military invasion of Ukraine.
Yesterday, it downgraded it even further, from “B” to “C”, citing “developments that further undermined” Moscow ‘s willingness to continue “repaying its public debt”.
The lower the rating, the less lenders will show confidence in Russia and will be willing to enter into loan agreements at reasonable interest rates.
Justifying the decision, Fitch cites a presidential decree signed on March 5 that could allow Russia to repay its creditors in certain countries in rubles, not foreign currency. The house also notes the central bank’s decision to restrict the transfer of certain securities to non-residents, as well as the US-British embargo on Russian hydrocarbons.
It considers “selective bankruptcy” to be “at least” possible, and possible technical obstacles, in particular obstacles to the transfer of funds imposed on Moscow, could reduce the Russian government’s ability and willingness to continue to service its external public debt.
If a moratorium is declared by Russia, it will be the first since 1998.
Source: Capital
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