urn:bbc:cps:curie:asset:ffa8d2eb-4536-47c5-a217-dfe09c317846

news.business.story.60672085.page

ngas

Home

News

Israel-Gaza War

War in Ukraine

World

Africa

Asia

Australia

Europe

Latin America

Middle East

US & Canada

England

N. Ireland

Scotland

Wales

In Pictures

BBC Verify

Sport

Business

Future of Business

Technology of Business

Work Culture

Market Data

Innovation

Technology

Science & Health

Artificial Intelligence

Culture

Film & TV

Music

Art & Design

Style

Books

Entertainment News

Travel

Destinations

World’s Table

Culture & Experiences

Adventures

The SpeciaList

Earth

Natural Wonders

Weather & Science

Climate Solutions

Sustainable Business

Green Living

Video

Live

Live News

Live Sport

Audio

Weather

China

India

Antarctica

Australia and Pacific

Caribbean & Bermuda

Central America

North America

South America

War in Ukraine: Russia soon unable to pay its debts, warns agency

Russia will soon be unable to pay its debts, according to a leading credit ratings agency.

Fitch Ratings downgraded its view of the country's government debt, warning a default is "imminent".

The move comes amid increasing international sanctions against Russia following its invasion of Ukraine. 

A credit rating is intended to help investors understand the level of risk they face in buying a country's debt - or bonds. 

A low rating means the chances of not getting repaid is considered to be high - and so an investor will charge more to lend to that country. 

This week, Moscow itself said its bond payments may be affected by sanctions.

The ratings cut - to C from B - is the second time this month Fitch has downgraded its view of Russia's ability to pay its debts. 

"This rating action follows our downgrade... on 2 March, and developments since then have, in our view, further undermined Russia's willingness to service government debt," the agency said. 

"The further ratcheting up of sanctions, and proposals that could limit trade in energy, increase the probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations," it added.

The announcement from Fitch came after the US and UK said they will ban Russian oil, as they step up the economic response to the invasion of Ukraine.

US President Joe Biden said the move targeted "the main artery of Russia's economy". 

Meanwhile, the European Union said it will end its reliance on Russian gas.

As a major exporter of energy, the measures are aimed to hit Moscow's finances, although experts warn this is also likely to send the price of oil and natural gas higher on global markets.

On Sunday, Moscow told investors that it would continue to service its sovereign debt.

However, it warned that international sanctions imposed on its energy industry could limit its ability and willingness to meet its obligations.

"The actual possibility of making such payments to non-residents will depend on the limiting measures introduced by foreign states in relation to the Russian Federation," the finance ministry said in a statement.

In recent days, rival ratings agencies Moody's Investors Service and S&P Global Ratings have also slashed their assessments of Russian sovereign debt.

It means the country's sovereign debt is now considered to be below investment grade, or in "junk" territory, by three of the world's major ratings companies. 

S&P said its move followed measures it believed would "substantially increase the risk of default".

Shane Oliver of investment management company AMP Capital believes a default on Russian debt was "effectively already occurring". 

"It will only service it in much depreciated roubles anyway and foreign investors are offloading it at fire sale prices. Fortunately the global exposure to it is relatively low," he told the BBC.

The Russian rouble has also hit record lows as countries around the world imposed increasingly tough sanctions on the country.

Last month, Russia's central bank more than doubled its interest rate to 20% in an attempt to stop the value of its currency from sliding further.

Dozens of global brands - including McDonald's, Coca-Cola and Starbucks - have halted business in Russia due to the invasion of Ukraine.

Gen Oleksandr Syrskyi said Russia is making tactical gains and benefitting from warmer weather.

Ukraine army chief says Russia making gains in east

With ammo critically low and Western aid stalled, what might Russia attempt in Ukraine this year?

Ukraine could face defeat in 2024. Here's how that might look

A leading science journalist - Asya Kazantseva - also gets the label used to silence Kremlin critics.

BBC Russian journalist branded 'foreign agent'

The two-week festival aims to give Ukrainian refugees the opportunity to be proud of their culture.

Festival celebrates Ukrainian culture

The West African country is increasingly turning to Moscow for support after breaking ties with the West.

Russian troops arrive in Niger as agreement begins

Water levels in Orenburg are 2m above critical levels, as the mayor urges mass evacuations.

Russia floods leave houses almost submerged

One of Ukraine's main electricity providers says the Trypillya plant can no longer generate power.

Key power plant near Kyiv destroyed by Russian strikes

Trypillya power plant was the largest provider of electricity for three regions, including Kyiv.