Russia’s debt rating downgraded by Fitch

Russia’s debt rating was cut by Fitch Ratings for the first time in more than a decade because of falling oil prices, dwindling foreign currency reserves and record capital flight.

The rating was lowered to BBB, the second-lowest investment grade, from BBB+, Fitch said in a statement on Wednesday. Fitch maintained its negative outlook. Standard & Poor’s Ratings Services took the same action on Dec. 8.


Russia, the world’s largest energy supplier, has spent US$210-billion, or more than a third, of its currency reserves defending the ruble since August. Foreign investors have pulled about US$290-billion out of the country in the same period, according to BNP Paribas SA estimates.

“The scale of capital outflows and the pace of decline in Russia’s foreign exchange reserves have materially weakened the sovereign balance sheet,” said Edward Parker, Fitch’s head of emerging markets in Europe, in the statement. “The downgrade reflects the negative impact on Russia from the fall in commodity prices and the dislocation to global capital markets that has left Russian banks and companies struggling” to refinance debt.

Financial Post