Fitch Ratings affirmed Russia's triple-B ratings, with a
negative outlook amid heightened concerns about the impact of
further sanctions on the country's flatlining economy. It lowered
the country ceiling one notch to triple-B.
Even so, market participants aren't too concerned about Friday's
rating actions.
"It's not going to have much of an impact," said Uday Patnaik,
head of emerging-market debt at Legal & General Investment
Management.
"Russian bonds, either sovereign or quasisovereigns like
Gazprom, already trade as if they were rated BB," he said.
Russian government bonds issued in dollars yield 4.7% on
average, having been as low as 3% at the start of last year, Markit
data show. Bonds issued by European governments with triple-B
ratings on average yield 2.49%, according to Markit.
Fitch Ratings cited the deteriorating security situation in
eastern Ukraine, which has strained relations between Russia, the
European Union and the U.S. The U.S. had earlier ramped up
sanctions on Russian individuals and a handful of companies, with
the EU also expanding its list of sanctioned individuals and
considering a range of more stringent measures that would target
Russia's economy. Additional sanctions are expected in connection
with the July 17 Malaysia Airlines crash.
Moody's placed Russia on review for downgrade in March, while
Fitch warned in April that it would consider cutting Russia's
credit rating if further sanctions were imposed.
Standard & Poor's Corp. downgraded Russia to one notch above
junk at the end of April, citing the country's weakening growth
prospects amid the continuing tensions with Ukraine.
Earlier Friday, Russia's central bank unexpectedly raised
interest rates by 0.5 percentage point to 8%, the third time it has
raised rates this year. Economists said the move underscores the
bank's commitments to fighting inflation rather than trying to
stimulate economic growth.
Maria Armental contributed to this article
Write to Ben Edwards at ben.edwards@wsj.com
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