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The risk of a Russian default is “imminent”, according to Fitch

2022-03-09T06:15:47.005Z


To justify its decision to lower its rating of the Russian debt, Fitch evokes a decree which could authorize Moscow to refund the creditors of certain countries in rubles rather than in foreign currency.


The rating agency Fitch again lowered its rating on Russia's debt on Tuesday, a decision meaning that the risk of a sovereign default is in its eyes “

imminent

”.

Fitch, like other major agencies S&P Global Ratings and Moody's, had already placed the country's long-term debt rating in early March in the category of countries likely to be unable to repay their debt due to the accumulation of economic sanctions. against him after the invasion of Ukraine.

Read alsoWar in Ukraine: how Russia prepared to face economic sanctions

But she decided on Tuesday to downgrade it further, from "

B

" to "

C

", in view of "

developments which have further undermined Russia's willingness to repay public debt

".

However, the lower this rating, the less the lenders will trust the country and the less it will be able to borrow money at reasonable interest rates.

To justify its decision, Fitch points to a presidential decree signed on March 5 which could authorize Russia to reimburse creditors of certain countries in rubles rather than in foreign currency.

The agency also mentions a decision by the Russian central bank to restrict the transfer of certain bonds to non-residents.

Read alsoHow the Ukrainian economy gradually moved away from Russia

More generally, tougher sanctions and proposals that could limit energy trade increase the likelihood of a policy response from Russia that includes at least a selective non-payment of its sovereign obligations

,” Fitch said.

It is also possible that technical barriers such as the blocking of funds transfers prevent the repayment of the debt.

A default by Moscow would be the first since 1998.

Source: lefigaro

All news articles on 2022-03-09

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