New York, 15 Mar Fitch downgraded the international currency issuer risk ratings (IDR) of 31 Russian banks from “B” to “CC”, while it has lowered the short-term rating from “B” to “C”. According to a statement, Fitch took into account the Russian presidential decree of March 5, which imposes “insurmountable obstacles” to banks' ability to make scheduled debt payments to certain international creditors in their original currency. “While the practical implementation of this decree remains unclear, we believe that the highly high risk is best reflected in Fitch's definition of a “CC” rating, according to which some form of non-compliance seems likely,” the note says. In addition, the agency underlines the risk of further intervention in foreign currency transactions and deposits in the banking sector. On March 8, the agency already lowered the rating of Russia's long-term sovereign debt in foreign currency from “B” to “C”, and considered that non-compliance with its obligations was “imminent”. In addition, Fitch reduced the VR rating of all Russian banks “b” to “ccc”, to “reflect the sharp deterioration of the operating environment for conducting banking business.” “The sanctions imposed by the United States and the European Union have significantly increased economic and financial market risks, which means that we see a very high fundamental credit risk to banks' asset quality, solvency, financing and liquidity profiles,” concludes Fitch. On March 6, the rating agency Moody's also downgraded the sovereign solvency note of the Government of Russia, which was already part of the “junk bond”, from “B3" to “Ca”, due to the expectation that capital controls of the Central Bank of Russia will restrict cross-border payments, including servicing the debt of the Russian Federation government bonds. CHIEF jfu/cfa
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