The financial rating agency Standard & Poor’s lowered the rating of Russia and Ukraine at a level for each country, due to the Russian invasion of Ukrainian territory and the ongoing military intervention, placing Russia’s public debt in the “junk” category.
“Russia’s military intervention in Ukraine has motivated strong international sanctionsincluding in large areas of the Russian banking system,” S&P explains in the note accompanying the decision, announced last night, in which the rating of Russia is now considered speculative.
“We believe that the sanctions announced could have a significant direct effect and repercussions on economic and commercial activity, consumer confidence and financial stability, and we also anticipate that geopolitical tensions will have an impact on private sector confidence. , hitting economic growth,” the rating agency added.
In the text that downgrades the opinion on Russia’s sovereign credit quality from BBB- to BB+, that is, at the level of the no-investment recommendation, “junk” (or “junk”, as commonly referred to in specialist terminology, in English), S&P points out that “there is enormous uncertainty about the evolution of the geopolitical conflict and the possibility of additional sanctions, as well as the ultimate financial repercussions of the current restrictions” .
In addition to putting Russia in “credit monitoring negative”, i.e. the continuation of the review process of the rating opened with the possibility of further declines, S&P also announced that the rating of Ukraine by a level, from B to B-, pushing the opinion of the country further into negative territory.
“Russia’s military assault on Ukraine poses risks to economic growth, financial stability, external position and public finances, so we are lowering the rating of local and foreign currency to B-, putting it in “credit monitoring negative,” reads the note released alongside the fall of the rating From Russia.
“We can come and download the rating if the multiple uncertainties linked to the military conflict substantially weaken the external liquidity, the financial system or the administrative capacity of the government” of Ukraine, concludes S&P.
A rating BB, as in the case of Russia, is at the speculative level, i.e. the issuer of the debt is “less vulnerable in the short term, but faces great uncertainties with a negative impact on the commercial, financial and economic conditions”.
already the rating B, also at a speculative level and which now applies to Ukraine, implies a country “more vulnerable to trade, financial and economic conditions”, but which “currently maintains the capacity to meet its financial commitments”.
Russia launched a military offensive in Ukraine at dawn on Thursday, with ground forces and bombing targets in several cities, which has already left at least more than 120 dead, including civilians, and hundreds injured, in Ukrainian territory, according to Kiev. The UN reported 100,000 people displaced on the first day of the fighting.