Fitch downgrades Russia's sovereign rating to junk status

[BENGALURU] Fitch on Wednesday downgraded Russia's sovereign credit rating by six notches to 'junk' status in response to unprecedented sanctions triggered by the West against the country over its invasion of Ukraine.

Fitch downgraded Russia to "B" from "BBB" and placed the country's ratings on "rating watch negative".

Both the countries' financial markets have unsurprisingly been thrown into turmoil by the events in recent days, which mark the biggest military attack in Europe since World War Two and have seen Moscow hit with stiff Western sanctions.

Fitch said it expects further ratcheting up of sanctions on Russian banks.

These sanctions are likely to weigh on Russia's ability to pay debt, the ratings agency added.

Sanctions imposed on Russia have significantly increased the chance of the country defaulting on its dollar and other international market government debt, analysts at JPMorgan and elsewhere warned on Wednesday.

The sanctions imposed by Western countries will also markedly weaken Russia's GDP growth potential relative to the ratings agency's previous assessment of 1.6 per cent, Fitch said.

Last week, S&P lowered Russia's rating to 'junk' status and Moody's put the country on review for a downgrade to junk. REUTERS