MOSCOW: Moody’s Investors Service downgraded Russia’s credit rating to the second-lowest investment grade due to sluggish growth prospects worsened by the crisis in Ukraine and international sanctions.
Moody’s downgraded the government one level to Baa2 from Baa1 and kept a negative outlook on the country’s rating. It is in line with Fitch Ratings Ltd.’s credit grade and one notch above that at Standard & Poor’s, which lowered Russia to BBB- in April.
Russia has spent $13 billion from its foreign reserves this month to bolster the ruble as tumbling oil prices added to the woes of the economy that is teetering towards recession amid the sanctions by the US and European Union. President Vladimir Putin and European negotiators are struggling to hold together a six-week truce in eastern Ukraine, inching forward in talks to prevent the fighting from escalating.
The downgrade is driven by “Russia’s increasingly subdued medium-term growth prospect” said Moody’s Investors Service Inc. “The gradual and ongoing erosion of the country’s international reserve buffer” contributed to a weakening of Russia’s creditworthiness.
