MOSCOW (MRC) -- Russia will have to contend with sanctions "for the foreseeable future" as the continuing conflict in Ukraine hinders its prospects for regaining an investment grade rating, reported Bloomberg with reference to Moody’s Investors Service.
Moody’s, which in February joined Standard & Poor’s in cutting the country’s debt to junk, is "highly unlikely" to raise Russia to investment grade within the next 12 to 18 months, Kristin Lindow, senior vice president at the rating company, said in an interview on Friday in London. Moody’s rates the country Ba1, the highest speculative level, with a negative outlook.
European Union governments on Monday prolonged sanctions against Russia by six months to the end of January as sporadic fighting intensified between Ukrainian troops and pro-Russian separatists, further rattling a truce negotiated last February in Minsk, Belarus. The curbs on trade and investment have helped push the Russian economy toward its first recession since 2009.
"As long as the sanctions are in place and most of the issuers in the economy have a difficult time refinancing their external debt, it’s unlikely that we would move the rating back to investment grade," Lindow said.
As MRC wrote before, in January 2015, Moody's downgraded ratings of 8 non-financial corporations, including Rosneft, Gazprom Neft, Lukoil, Russian Railways. Moody's Investors Service downgraded the ratings of Rosneft, Gazprom Neft and 6 other non-financial corporations and their subsidiaries after downgrading Russia's sovereign rating.
In particular, Moody's downgraded to Baa3 from Baa2 the ratings of the following companies: Rosneft and its subsidiaries Rosneft Finance SA, Rosneft International Finance Limited and Rosneft International Holdings Limited; Gazprom Neft and its subsidiary GPN Capital S.A., the Federal Passenger Company, Lukoil and its subsidiary LUKOIL International Finance, MMC Norilsk Nickel and its subsidiary MMC Finance Ltd., Russian Railways and its subsidiary RZD Capital Plc. All these ratings have been placed under review for further possible downgrade.
The rating action followed Moody's decision to downgrade Russia's sovereign ratings to Baa3 from Baa2 on January 16, 2015.
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