Russia’s credit rating has been downgraded to ‘junk’ after the West imposed a barrage of economic sanctions over the war in Ukraine.
Two major rating firms said the punishments inflicted on Moscow had weakened its economy and thrown into doubt its ability to service debt.
‘The severity of international sanctions in response to Russia’s military invasion of Ukraine has heightened macro-financial stability risks, represents a huge shock to Russia’s credit fundamentals and could undermine its willingness to service government debt,’ Fitch said in a statement.
Moody’s Investors Service also downgraded Russia to junk, meaning three of the world’s top rating agencies have no confidence in its credit rating, after S&P made the same assessment last week.
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Russia’s financial markets have been thrown into turmoil by sanctions imposed over its invasion of Ukraine, the biggest attack on a European state since World War Two.
The UK, US, EU and more than two dozen other nations have retaliated with economic measures that have sent the Russian rouble tumbling, cut major Russian banks from the global financial system and hurt state-owned firms and oligarchs, including President Vladimir Putin himself.
Key Russian banks have also been barred from the SWIFT international payments system, preventing them from secure international communication and isolating them from much of the global financial system.
Policymakers are expected to continue tightening sanctions, for example by adding more kinds of technology and new companies to blacklists.
In the UK, Prime Minister Boris Johnson is being pressed to go faster in targeting Russian oligarchs, after it was conceded it could take ‘weeks and months’ to build legally-sound cases.
Downing Street said on Thursday it would consider possible changes to speed up the process as ministers sought to apply pressure on Putin, who has ramped up his bombing campaign.
Senior Tory MP Tom Tugendhat called for the UK to follow in the footsteps of European nations which have seized assets of wealthy Russians such as luxury yachts and property.
‘We should be looking immediately to seize those assets linked to those who are profiting from Putin’s war machine, holding it in trust and returning it to the Russian people as soon as possible,’ he said.
There have been questions over why billionaires such as Roman Abramovich, who has announced he will sell Chelsea FC, have not been hit with sanctions.
A government source acknowledged it could take ‘weeks and months’ to build a legally watertight case against some Russian oligarchs. They told the PA news agency: ‘We’re working round the clock and going as quick as we can.’
Downing Street sought to downplay the issue, with the prime minister’s official spokesman insisting: ‘We are not being held back from introducing sanctions.’
He also sought to argue that sanctions on the banks funding the Russian president’s military machine will exert more pressure than going after his wealthy allies.
‘Our judgment is placing sanctions particularly on large banks and companies … that is what we believe will exert the most pressure on Putin’s regime and will throttle off funding for this illegal war against Ukraine.’
Russia-Ukraine war: Everything you need to know
Russia’s invasion of Ukraine has entered its seventh day, with the attacks beginning on February 24.
Since then, Ukraine has suffered widespread damages and loss of life amid Russia’s major bombing campaign.
The majority of attacks have been focused in the capital city of Kyiv, where Ukrainian President Volodymyr Zelensky is currently based.
Russian President Vladamir Putin is prepared to resume talks with Ukraine in bid to end war, according to a Kremlin spokesperson.
- Russia claims to have seized control of its first major Ukrainian city
- Top Russian general killed fighting in Ukraine in ‘major blow for invaders’
- Russia ‘ready for peace talks’ but won’t stop bombing Ukraine’s military infrastructure
- Putin left with few allies as world condemns Ukraine ‘atrocities’
- Superyachts belonging to close Putin ally and oligarch seized in Europe
- More than one million people have now fled Ukraine after one week of war
- Ukraine says Chechen hit squad sent to kill Zelensky ‘eliminated’
- Russian-backed RT channel pulled immediately from British TV
- Anonymous claims to have shut down Russia’s space agency
- Where in London to donate clothes, food and toiletries for Ukraine
- Formula 1 terminates contract with Russian Grand Prix
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