- Fitch Ratings has revised the Outlook on Russia’s Long-term foreign and local currency Issuer Default Ratings (IDR) to Negative from Stable and affirmed the IDRs at ‘BBB’
- Ratings on Russia’s senior unsecured foreign and local currency bonds have also been affirmed at ‘BBB’.
- The Short-term rating has been affirmed at ‘F3′ and the Country Ceiling at ‘BBB+’.
- Cuts Russia growth forecast to less than 1% in 2014 and 2% in 2015
Cites;
- The revision of the Outlook to Negative reflects the potential impact of sanctions on Russia’s economy and business environment
- Since US and EU banks and investors may well be reluctant to lend to Russia under the current circumstances, the economy may slow further and the private sector may require official support.
The direct impact of sanctions announced so far is minor, but the incorporation of Crimea into the Russian Federation will likely lead the EU and US to extend sanctions further in response. Furthermore, foreign investors may anticipate further official action and restrict Russian entities’ access to external financing. Risk premiums have already risen and syndicated loans to a number of large corporates are reported to be on hold. In a worst-case scenario, the US may prevent foreign financial institutions from doing business with Russian banks and corporates.
