Russia's Credit Rating Cut to Brink of Junk

Fitch Ratings cut its credit ratings on Russia to the brink of junk territory, saying the country’s economic outlook has deteriorated significantly in the past six months amid sharp declines in oil prices and the ruble.

The downgrade brings Fitch’s ratings on Russia in line with those from Standard & Poor’s Ratings Services.

Fitch, which lowered its ratings by one notch to triple-B-minus, also said the Western sanctions first imposed in March 2014 continue to weigh on the economy by blocking Russian banks’ access to external capital markets.

The ratings outlook is negative as the ratings firm said it expects the Russian economy to contract by 4% this year, compared with its previous forecast of minus 1.5%, based on the slight growth seen in 2014.

Fitch said continued exchange-rate volatility, sustained low oil prices and a faster-than-expected depletion of international reserves, among other things, could lead to further ratings cuts.

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