(Finance) – After days of war and a tsunami that hit the financial sector, the cut in the rating of Russiaa rejection that hinges onisolation of the country caused of sanctions imposed by the West, on the exclusion from the international system of SWIFT payments, and on theincreased probability of defaultdespite the existence of huge reserves.
The US rating agency S&P thus announced the cut the sovereign rating of Russia confirming a negative credit watch. The credit rating was reduced for the second time within a few days and went from BB + to CCC- indicating a location “vulnerable”. “The downgrade follows the imposition of measures that we believe will substantially increase the risk of default,” explains the US agency.
S&P’s decision was accompanied by thesimilar action by Fitch and Moody’s which cut Russia’s rating to a “junk” level. Both performed a six notch cut (steps) carrying the evaluation at B3.
“The severity of the international sanctions represents a huge shock to Russia’s credit fundamentals, and threatens its willingness to pay off the government debt,” Fitch points out, while Moody’s sees the risk of “a protracted economic and industry crisis. financial due to the sanctions that limit access to the country’s international reserves “.
At these levels the Russia’s default is practically around the corner and in fact, on March 16, a tranche of coupons on the debt for an amount of over 100 million dollars will expire. Should Moscow also pass this first test, immediately, on April 4th, bonds worth 2 billion dollars will expire.