Standard and Poor's and Fitch lowered Russia's ratingsStaff writer ▼ | March 24, 2014
Standard and Poor's (S&P) and Fitch lowered their rating outlook on Russia as the U.S. and the European Union imposed sanctions on the country after its annexation of the Ukraine's autonomous region of Crimea.Standard and Poor's (S&P) and Fitch lowered their rating outlook on Russia as the U.S. and the European Union imposed sanctions on the country after its annexation of the Ukraine's autonomous region of Crimea.
The reduction of the outlook from Stable to Negative reflects concerns over the potential impact of the sanctions on Russia's creditworthiness.
S&P attributed the downgrade to the heightened geopolitical risks and the prospects of further economic sanctions by the international community, which continues to consider Crimea legally to be a part of Ukraine. The agency affirmed its 'BBB' credit rating, citing Russia's relatively strong external and government balance sheets.
According to S&P, further sanctions could reduce the flow of potential investment into Russia, which could trigger an increase in capital outflows, and further weaken the already slowing economy.
The outlook will be revised to Stable if the Russian economy were to prove resilient to the current challenges, and if its external and fiscal buffers were to remain in line with expectations, S&P said.
Fitch Ratings followed with a similar action, saying that under the current circumstances investors would be reluctant to lend to Russia, forcing the private sector to seek official support. Confirming its BBB rating, Fitch assessed that the country's strong balance sheet, low government debt and robust sovereign net foreign assets are supportive of the rating. ■