The rating agency Fitch lowered the rating granted to the debt of 28 Russian natural resource groups on Saturday and estimates that a ” default of some sort seems likely ».
Fitch downgraded gas giant Gazprom, oil company Lukoil, mining companies Rusal, Polyus, Evraz and 23 other resource-related companies from B to “ Mainly DC which means it is ” probable » that these companies do not honor their financial commitments.
Moody’s also lowers its rating
The ratings of Gazprom and Lukoil had also been downgraded this week by Moody’s, another rating agency, to a level indicating a very high risk of non-reimbursement.
For the rating agency, the authorization given by the Russian government to repay in ruble the debts contracted with the countries which appear in a list of countries ” hostile could jeopardize the ability of these companies to pay their creditors on time.
This list includes, among others, the countries of the European Union, Australia, the United Kingdom, Canada, Monaco, South Korea, the United States, Switzerland and Japan.
Sanctions erode the operating environment for Russian companies
This measure is part of a series of actions by the Russian government and the country’s central bank to try to limit the fall of the national currency, the ruble, which has lost half its value since January 1 due to the sanctions imposed on Moscow by the West after the Russian invasion of Ukraine.
Fitch further adds that ” the continued tightening of sanctions, including restrictions on trade and energy imports, increases the likelihood of a political response from Russia, and further weakens its economy, eroding the operating environment for its businesses ».
The United States announced on Tuesday an embargo on Russian oil and gas imports, like the United Kingdom for oil.
Russia on the brink of default
In early March, three major rating agencies placed Russia’s long-term debt rating in the category of countries likely to be unable to repay their debt due to the accumulation of sanctions against it. Fitch subsequently downgraded its rating further, meaning that the risk of a sovereign default was in its view ” imminent ».
The lower a credit rating, the less confidence lenders will have in the country and the less it will be able to borrow money at reasonable interest rates.