Standard and Poor’s Downgrades Russia Credit Rating to Junk
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iStock/Thinkstock(NEW YORK) — Standard and Poor’s has lowered the rating of the Russian ruble to BB+/B amidst negative economic outlook.
The agency notes a “significant change in our perception of Russia’s monetary flexibility over the 2015-2018 forecast horizon and the effect we expect Russia’s weakening economy to have on its financial system.” The downgraded credit rating comes as the ruble has been hurt by the continuing decrease in oil prices and the ongoing tension with Ukraine.
The ratings agency also said it views Russia’s institutional and governance as a rating weakness. “Political power is highly centralized with few checks and balances,” Standard and Poor’s says, “we do not currently expect that the government will be able to effectively tackle the long-standing structural obstacles…to stronger economic growth.”
As part of the rating, Standard and Poor’s gave Russia poor marks on institutional and economic assessments and neutral marks for external assessment, fiscal performance and monetary assessment. The only strong grade Russia received in the latest rating was for its “modest” debt burden.
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