The rating agency Fitch downgraded Russia’s credit rating on Tuesday (8) from “B” to “C”. The country’s rating had already been downgraded to “junk” last week.
Fitch said a Russian default was imminent, as sanctions and trade restrictions undermine the country’s willingness to pay interest on the debt.
On Tuesday, US President Joe Biden announced a ban on imports of oil, gas and coal from Russia. The UK also said it would ban Russian oil imports, while the European Union unveiled a plan to cut gas imports by two-thirds within a year.
Western sanctions imposed after the invasion of Ukraine caused turmoil in Russian financial markets.
The agency also highlighted Vladimir Putin’s presidential decree, which could force a redenomination of sovereign debt payments in foreign currency to local currency for creditors in specific countries.
“The increase in sanctions and proposals that could limit energy trade raises the likelihood of a political response from Russia that includes at least the selective nonpayment of its sovereign debt obligations,” Fitch said in a statement.
On March 16, Russia must pay US$ 107 million in coupons related to two bonds – the country, however, has a period of 30 days to make the payment from that date.
The “C” grade given by the agency on Tuesday is just one notch above default. As a result, Fitch’s assessment is in line with that of Moody’s (which rated Russia “Ca”).
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