Russia now has an investment-grade sovereign rating from Moody’s (Baa3) with a stable outlook.
Moscow has repeatedly denied plans to attack Ukraine, but Western countries continue to threaten Russia with harsh sanctions. According to Moody’s, they may impose restrictions on the secondary market for government debt, restrictions on the access of Russian banks to international payment systems and the inclusion of Russian financial institutions in the SDN sanctions list.
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According to the agency’s forecast, Russian banks will be able to absorb the increased supply of government securities. However, the rise in the cost of borrowing for the government cannot be avoided.
S&P and Fitch predicted damage to Russia even without the escalation of the conflict with Ukraine
Restrictions on Russian banks’ access to the SWIFT international financial communications system will not stop cross-border Russian payments, but banks will have to look for alternative ways to send financial messages, Moody’s said. The Russian analogue of SPFS will not be able to quickly compensate for the loss of access to SWIFT, the agency pointed out.
The most significant limitation will be the inclusion of large Russian state-owned banks in the SDN list. In this case, non-US counterparties of Russian banks will be forced to follow US sanctions, Moody’s noted.
Foreign Ministry expressed hope that the EU will not impose sanctions against Russia
The day before similar estimates were published by S&P and Fitch. They also ruled out a war between Russia and Ukraine. However, Russia could face more severe sanctions due to tensions, they noted.
There is a high probability of a ban on the participation of US investors in the secondary market of Russian government debt and blocking sanctions against high-ranking officials, state institutions and financial assets of Russian President Vladimir Putin’s entourage, Fitch said. Such severe sanctions from the West will limit the prospects for long-term growth of the Russian economy, S&P stressed.