11:07 - 3.03.2022

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March 3, Fineko/abc.az. Moody's Investors Service has downgraded the Government of Russia's long-term issuer debt ratings in local and foreign currency by six notches at once - to B3 from Baa3.

ABC.AZ reports that Moody’s also downgraded senior unsecured debt ratings in local and foreign currency to B3 from Baa3.

Thus, the ratings have been transferred from the investment category to the high-risk category.

The ratings remain on review for further downgrade. Concurrently, Moody's has also downgraded the domestic currency Other Short Term rating to Not Prime (NP) from P-3.

"The multi-notch downgrade of Russia's ratings and maintaining the review for further downgrade were triggered by the severe sanctions that Western countries have imposed on Russia, including the sanctioning of the Central Bank of the Russian Federation (CBR) and some large financial institutions, in response to its military invasion of Ukraine (B3 review for downgrade) and retaliatory measures taken by the Russian authorities,” Moody’s says.

Agency's experts say about heightened risk of disruption to sovereign debt repayment given the severe and coordinated sanctions and significant concerns around Russia's willingness to service its obligations. They also see the likelihood of a sustained disruption to the economy and financial sector from the sanctions that limit access to Russia's international reserves intended to buffer Russia from adverse shocks.

"The scope and severity of the sanctions announced to date have gone beyond Moody's initial expectations and will have material credit implications,” Moody’s says.