Fitch downgraded the credit rating of Russia – RBC

Fitch downgraded the credit rating of Russia – RBC

Photo: RIA Novosti

Message Fitch’s long-term sovereign credit rating lowered Russia’s foreign and local currency posted on the site of the rating agency. Now Russia’s credit rating stood on the verge of the so-called “Junk level”: rating below «BBB-» are considered high risk and dangerous for investment.

In the reasoning for downgrade Fitch pointed to factors such as the sharp drop in the ruble and oil prices, as well as a sharp rise in the key rate to 17%. The rating agency notes that its negative impact on the Russian economy continues to maintain Western sanctions, because of which the Russian banks and state corporations do not have access to external capital markets.

Fitch also notes that now expects reduction of the Russian economy 4% (previous forecast agency said a reduction of 1.5%). Economic contraction will be accompanied by a decrease in consumer spending and investment. The Agency believes that economic growth in Russia may end before 2017.

According to the forecast Fitch, the budget deficit in 2015 will amount to 3.7% of GDP. Inflation at the end of 2015 could reach 8,5%.

The downgrade Russia to «BBB-» eve experts predicted Societe General. At the end of December 2014 another major rating agency, Standard & amp; Poor’s, has sent Russia’s sovereign credit rating on review with negative implications (now Russia’s rating from S & amp; P is at «BBB-» with a negative outlook).

As reported by Bloomberg on January 9, traders estimate the probability of default on government bonds as the Russian high – the country ranked fifth in the list of states with a high probability of default, ahead of Lebanon, Egypt and Portugal.