Credit Rating Agencies Affirm Russia’s Rating, Warn of New Sanctions Effects

Russia’s credit profile would be damaged if the United States introduces tough new sanctions against Moscow, international credit rating agency Moody’s said on Friday, becoming the latest such financial institution to warn of the danger, Reuters reports.

“The most disruptive potential new sanctions could come from the U.S. legislature, where proposals have included sanctioning sovereign debt, state-owned financial institutions and the energy sector,” said Moody’s, which currently has a “positive outlook” on its sub-investment grade Ba1 Russia rating.

The move follows a similar warning from Fitch last month which said it was likely to strip Russia’s rating of its positive outlook if debt-focused sanctions were introduced by Washington.

Also on Friday, another major credit rating agency, S&P Global Ratings, affirmed Russia’s “BBB-/A-3” credit rating on Friday, saying the country’s solid external and public balance sheets should enable its economy to absorb shocks from possible new international sanctions.

S&P believes that a scenario whereby the United States imposes sanctions on the secondary market for Russian sovereign bonds would be disruptive to financial markets.

“We could take a negative rating action in the next 24 months if geopolitical events result in foreign governments introducing materially tighter sanctions on Russia,” the ratings agency said.

S&P becomes the latest major rating agency to warn of the negative impact on the nation’s credit profile if the United States introduces new sanctions against Moscow.

The agency kept the country’s outlook unchanged at stable, factoring in the agency’s assumption of an adequate government policy response in the event of additional sanctions.