Fitch: Russia’s sovereign default is inevitable
Fitch Ratings downgraded Russia’s credit rating to “C” (very low level of creditworthiness, financial stability), because it believes that the country’s sovereign default is “inevitable.”
Ukraine , Ukrainegate , 9 , March , 2022 | Ukraine News
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The agency downgraded the rating by six degrees less than a week after lowering Moscow’s rating to “B” (low). Fitch said recent changes had further undermined Russia’s willingness to service its public debt.
In particular, the decree of Russian President Vladimir Putin of March 5, which could potentially lead to the denomination of payments for sovereign debt in foreign currency in local currency for creditors in certain countries, was affected. Also, according to employees of the agency, the decisions of the Central Bank of the Russian Federation limited the transfer of coupon payments on debt in national currency to non-residents.
“Further tightening of sanctions and proposals that could restrict energy trade increase the likelihood of Russia’s political response, which will include at least selective non-payment of its sovereign debt,” the report said.
The agency notes that the risk of establishing technical barriers to debt service by the Russian Federation has increased, including through direct blocking of funds transfers, or through clearing and settlement systems.
According to Fitch Ratings, these factors can lead to non-payment of commercial debt during the established grace periods.
Source: Ukrgate
