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Russia Rating agency Fitch has warned that its loans are on the verge of default, as sanctions imposed since Ukraine’s war hit its economy.
Fitch has reduced Russia’s sovereign debt by six places to its second lowest level. This is just one step above the borrowers who have defaulted.
The agency has warned:
The ‘C’ rating reflects Fitch’s view that a sovereign default is imminent.
AFP news agency
(@AFP)#Update Rating agency Fitch downgraded Russia’s sovereign debt rating again in the junk zone from “B” to “C”, saying the decision reflects the view that a default is “imminent”.
“Junk” status is the category of countries that are at risk of not being able to repay their debt. pic.twitter.com/TNCfu3JFNb
Fitch said developments following Russia’s last downgrade on March 2 have further undermined the country’s willingness to pay off government debt.
It points to President Vladimir Putin’s decree last week that Russian creditors can use the ruble to pay off some foreign currency loans, and a ban on some ruble-denominated loan coupon transfers from the country’s central bank.
Fitch says sharper sanctions could prompt Moscow to default on its obligations:
By pushing for sanctions and proposals that could limit trade in energy, Russia raises the possibility of a policy response that does not include at least selectively paying off its sovereign debt obligations.
Following the statement, the US and Britain said they would impose sanctions on Russian oil, as the economic response to the invasion of Ukraine continued.
Russia is due to make its next loan repayments on March 16 – although it will have a 30-day grace period to meet coupon payments.
Western sanctions, including a ban on Russia’s central bank on access to foreign exchange reserves, have barred Putin from accessing it. Much of the $630bn War Ark Made in Foreign Currencies Before the Invasion,
Yesterday, major Western countries suspended business in Russia, with Starbucks, Coca-Cola, Pepsi and McDonald’s joining Ukraine in a post-war pullout.
Shell announced plans to withdraw from Russian oil and gas and Unilever has said it will stop importing and exporting its products with Russia:
European markets are set to open higher, with the FTSE 100 on track to jump over 1% at the open.
Jeremy Naylor
(@jeremineyler_ig)#Wednesday Market: #Europe Hopeful but looks fragile. china down #HangSang New five and a half years less. outside company list #Russia Rises. #Oil The US UK EU plans to impose sanctions on Russian production. #Sleep Close to record highs. LME stops #nickel Trade – #China Trader lost billions in nickel short pic.twitter.com/HugYHdRw1S
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- 3pm GMT: US JOLTs total job openings in January
- 3.30 a.m. GMT: IEA weekly US oil inventory data