Russia's credit rating reduced to 'Junk' as sanctions further increase financial risk

S&P’s decision strips Russia of its investment grade standing at one of the main three rating agencies, pushing Moscow into a league of riskier countries that typically pay higher borrowing costs.

S&P late on Friday said that it would reduce Russia’s rating from triple-B minus to double-B positive.

This cut would reduce Russia’s rating to ‘Junk’ status seeing that Western sanctions are already dealing a severe blow to the country’s financial markets.

S&P’s decision strips Russia of its investment-grade standing at one of the main three rating agencies, pushing Moscow into a league of riskier countries that typically pay higher borrowing costs.

The move came as Russia’s invasion of Ukraine triggered a string of downgrades from the big agencies, with Fitch Ratings lowering Ukraine’s credit rating and Moody’s Investors Service warning that both countries could face cuts.

The S&P stated that it could reduce Russia’s rating further over the next three months once its analysts have “more clarity on the full macroeconomic repercussions of the existing sanctions and the evolution of the geopolitical conflict”. The agency also lowered Ukraine’s rating to B minus from B.

Moody’s also late on Friday said it had placed Russia’s credit rating on review for a downgrade, prompted by a “significant further elevation of the geopolitical risks”. Russia still holds an investment-grade status both with Moody’s and Fitch.