Russia’s rating is now equal to that of Argentina and the communist island of Cuba, while it is lower than that of many poor countries, including Iraq and Ethiopia.
Moody’s warned that “the risk of default has risen significantly” as it forecast a 7% drop in Russian GDP in 2022, higher inflation and falling living standards.
The “negative” outlook given by the rating agency suggests that the country could soon be downgraded to the lowest rating.
Russia said on Sunday that its payments to foreign creditors would depend on sanctions imposed on Moscow, raising fears of an imminent default. It faced a wave of downgrades from credit rating giants after the onslaught of Western sanctions fueled fears of a huge economic contraction and Moscow’s non-payment of debt.
“The downgrade to Ca is therefore prompted by serious concerns about Russia’s willingness and ability to pay its debts,” Moody’s said.
“Concerns about the government’s willingness to pay and the unpredictability of government actions could lead to larger than historical average losses for investors…increasing unpredictability in government actions reflects a lack of checks and balances around the executive.”
S&P and Fitch have also imposed heavy rating cuts on Russia in recent weeks as its economy is hit by Western sanctions and companies suspend operations in the country.
Credit default swaps – financial products that insure against the risk of default – hit record highs last week, signaling a 65% change as Russia defaults on its debt.
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This notice was published: 2022-03-06 20:00:00