Il Russia's default could be 'imminent'. This was stated by Fitch which has decided to further reduce Moscow's rating, after the previous downgrade established on 2 March. Underlying everything are the economic sanctions approved by Western states in response to the Russian invasion of Ukraine.
Default Russia, Fitch: "It's imminent"
The rating agency downgraded the rating on Russian debt, bringing it from “B” to “C”, “junk” level. According to Fitch, the risk of a default by Russia on its sovereign debt would be "imminent" as sanctions and trade restrictions imposed by Western states have "undermined its ability to service its debt". Just a few days ago, the US agency had downgraded Moscow, taking its rating from BBB to B, a "speculative" level, with a negative outlook.
“The further increase in sanctions and proposals that could limit energy trading increases the likelihood of a policy response from Russia that at least includes selective non-payment of its sovereign debt obligations,” Fitch said in a statement.
Default Russia: new EU sanctions are on the way
The reference is above all to the announcements arrived yesterday from the USA and the United Kingdom. The US president, Joe Biden, has in fact announced the embargo on oil, gas and coal from Moscow, while the British Prime Minister, Boris Johnson, confirmed his intention to cut imports of Russian oil by 2022.
Not only that, according to the latest news communicated in the morning by the French presidency of the EU Council, the European Union would have found a deal on an increase in sanctions to Russia and Belarus in response to the invasion of Ukraine.
The new agreement, in particular, could establish the exclusion of three Belarusian banks from the international financial platform Swift. New sanctions against the maritime sector and cryptocurrencies are also expected. The black list containing the names of Russian leaders and oligarchs will also be expanded.
“Putin thought that our dependence on Russian gas was enough to make us step back from this war in Ukraine. He felt that our energy ties with Russia would cripple us. And certainly our energy relations with Russia condition us”, said the EU High Representative for Foreign Policy, Josep Borrell, adding that: “The first thing we have to do is cut this umbilical cord that unites our economy with the Russian economy and interrupt the flow that allows them to accumulate reserves with which they can finance the war”.
“I would like to announce to this House that it has been circulated to the Member States a new package of sanctions, right now, which includes more than a hundred leaders at different levels of the Russian government and nomenclature. And therefore further economic sanctions which I hope will be approved before the conclusion of this session of the plenary", declared Borrell in his speech in the plenary at the European Parliament on Ukraine, in parallel asking EU citizens to contribute to the political efforts, lowering the heating of homes.
Default danger: the ruble collapses again
The further downgrade of the sovereign rating established by Fitch and the announcements of Western states caused yet another collapse of the ruble. In the morning, in fact, the exchange rate with the greenback soared to 118, up more than 12%. On international platforms, the Russian currency trades at 127 for a dollar and 140 for a euro.
Meanwhile, Russia's central bank has decided to continue to keep trading on the stock largely on hold Moscow Stock Exchange even for today, leaving only a limited number of operations active. The halt to trading on the stock market, which began on February 28, is the longest ever recorded in the country's modern history.
