The financial fallout over Russia’s invasion of Ukraine struck another blow, as Moody’s Investors Service dropped its long-term debt rating for the Russian government from Baa3 to B3, a massive fall that leaves Russia’s credit firmly in the “junk,” or non-investment grade status.
Moody’s said multiple factors have soured Russia’s credit rating, from the raft of severe sanctions the U.S., European Union and their allies have imposed on Russia to “significant concerns around Russia’s willingness to service its obligations.”
Moody’s took action on Russia shortly after another ratings firm, Fitch, also sharply lowered the country’s credit rating, saying international sanctions have brought “a huge shock to Russia’s credit fundamentals.” It also warned that further sanctions remain a distinct possibility.
*Bloomberg tweet on Moody’s downgrade
Moody’s latest cut comes less than a week after it stripped Russia of its investment-grade rating https://t.co/39y5mOS0dP
— Bloomberg (@business) March 6, 2022
Economic turmoil has kept the Moscow stock exchange closed last week!
As Russia’s central bank grasps for ways to bring a sense of stability to a chaotic situation NPR reports
However, the Central Bank more than doubled its key interest rate to 20%, after certain banks were cut off from SWIFT, (the global system that helps banks carry out secure transactions)
Russia’s international currency reserves, estimated in the hundreds of billions of dollars, has also been frozen by Western authorities.
In addition, Moody’s, estimates that the severe consequences from sanctions, will lead to Russia’s economy shrink by 7% in 2022 .