Russia's Credit Ratings Cut to Junk by Moody's and Fitch

[Donkees]

By Quentin Webb
5 hours ago

Russia’s credit ratings were downgraded deep into junk territory by Moody’s Investors Service and Fitch Ratings, with the duo highlighting the economic toll inflicted by wide-ranging sanctions and rising doubts about whether Moscow will honor its debts.

“The severity of international sanctions in response to Russia's military invasion of Ukraine has heightened macro-financial stability risks, represents a huge shock to Russia's credit fundamentals and could undermine its willingness to service government debt,” Fitch said in a statement issued late Wednesday U.S. time.

Both credit-rating companies cut their assessment of Russia by six notches, to a single-B rating in Fitch’s case and to B3 for Moody’s. The two rating firms, which had previously given Russia low investment-grade ratings of BBB and Baa3, respectively, both signaled further downgrades could follow.

Fitch warned that sanctions on Russian banks were likely to be ratcheted up. It also cautioned that Western sanctions, plus the large fall in the ruble, “markedly increase the risk of a broad-based loss of domestic confidence triggering bank deposit outflows and dollarisation.”

https://www.wsj.com/livecoverage/russia-ukraine-latest-news-2022-03-03/card/russia-s-credit-ratings-cut-to-junk-by-moody-s-and-fitch-hwWNrJAvI1L3VvO36Uym

[mahatmakanejeeves]

1. Doesn't this automatically trigger a recall from some of their lenders?

Sorry; I don't keep up with the bond market, but I thought that was one of the consequences.

[Donkees]

2. 'Foreign investors in Russian bonds are facing an unpleasant reality'

The report links to an earlier page:

Excerpt:

Foreign investors in Russian bonds are facing an unpleasant reality: they won’t be paid as part of Moscow’s retaliation for Western sanctions.

The Bank of Russia said this week as part of a slate of actions that it will block payments by depositories and registrars to foreign clients, including on the country’s local-currency sovereign bonds. The move comes as the central bank and Russia’s president have imposed capital controls to stymie foreign currency from leaving the country in recent days.

“It’s effectively a default if they’re unable or unwilling to transmit the payment,” said Edward Al-Hussainy, a senior analyst at Columbia Threadneedle Investments.

Investors who own ruble-denominated government bonds have been unable to sell them this week after the central bank shuttered the stock and bond markets to prevent the mass sale of Russian securities. Russia’s central bank temporarily prohibited brokers from selling securities on behalf of foreign clients earlier this week.


https://www.wsj.com/livecoverage/russia-ukraine-latest-news-2022-03-02/card/russia-s-central-bank-blocks-coupon-payments-to-foreign-bondholders-jjvmb0MCP525lHRqTqaq

[hatrack]

3. Wow, it's almost as if pouring money into a gangster economy was a . . . .

. . . a bad idea!!

[speak easy]

4. that's a nice stash of cash

"you would not want anything to happen to it"

[Donkees]

5. Putin: 'I really like 50 Cent...