The decision to lower Russia’s rating is dictated by serious concerns about Russia’s willingness and ability to pay its liabilities, the agency explains in a press release.
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Foreign investors are likely to lose some funds
See also: “Putin’s buddies” made money from the war? “Accounts need to be screened”
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This is bad news especially for foreign holders of the country’s government bonds. According to the optimal scenario – for today, it should be emphasized – they will probably only get back a fraction of their investment.
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“With a ‘Ca’ rating, the estimated amount returned by the issuer ranges from 35 to 65 percent. their face value“- it was written in the press release.
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The whole world is imposing sanctions on Russia for attacking Ukraine
Russia’s invasion of Ukraine provoked strong opposition from the entire democratic world. Between most major economies consent was given to cut off some of the Russian banks from the system SWIFT.
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This made the value of the Russian ruble drop sharply, and the crisis continues to deepen, as on Wednesday in the EU sanctions related to the expulsion of the Russians entered into force from the Association for Worldwide International Financial Telecommunications. Entities subject to these sanctions are virtually unable to transact with the rest of the world.
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Similar or similar sanctions have also been imposed on Russia by, inter alia, The United States, Great Britain and Japan.
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Russia is responding to the sanctions
The reaction of Russia’s central bank was immediate. Firstly He withheld payments to foreign investors, and on Wednesday refused to pay interest on debt denominated in the ruble. There is no certainty as to when payments will be “frozen”.
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On Sunday, the central bank announced that investors from countries that did not join the sanctions, will receive payments in ruble at the rate on the day of payment.
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