Analysts note that Russia has instantly turned from a promising liquid market, part of the large BRIC group (Brazil, Russia, India, China), into a pariah country.

REUTERS illustration

All three major international rating agencies have downgraded Russia’s rating to junk.

It is reported by the Center for Economic Strategy (CES) .

“Now the rating of the aggressor country from Fitch is at the level B, from S&P – at the level of CCC-, and from Moody’s – at the level of B3. All three agencies predict a further drop in the ratings of the Russian Federation,” the report says.

It is noted that the estimates reflect not only the sanctions and the expected economic decline. The rating agencies think that Russia will default because it simply doesn’t want to pay.

As CEC analysts explain, for any open economy, the default of the sovereign automatically means that state-owned banks and state-owned companies have no access to any financial resources. Potential default means increased risk of capital controls and asset nationalization. This will lead to the fact that even simply insuring international trade operations for any of the Russian jurisdictions will become much more expensive or impossible at all.

“Ukraine, in difficult financial conditions, when it had to restructure external debts, could rely on international financial organizations and their assistance. Russia cannot now. On the contrary, the international community is taking active steps to excommunicate the aggressor from the main financial markets and capital flows,” – the message says.

Analysts note that Russia has instantly turned from a promising liquid market, part of the large BRIC group (Brazil, Russia, India, China), into a pariah country. Russian securities are removed from stock indices – and, therefore, from the portfolios of large index funds, pension funds.

“In the financial markets, even touching the assets of the Russian Federation is becoming more and more toxic,” the CEC concluded.

(C)UNIAN 2022