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.”