Credit rating agency Fitch has withdrawn Russia’s ratings in compliance with European Union sanctions, following on from a decision to downgrade the country’s rating to “junk” earlier this month.
Sanctions targeting a number of Russian banks and businesses following the launch of what Vladimir Putin describes as a “special military operation” in Ukraine have crippled the country’s economy, prompting the ruble’s free fall. A number of prominent Russian individuals have also faced sanctions, although this has mostly been for political motives and will have had minimal economic impact.
Investors will remain worried that Russia could be plunged into a debt default until some type of resolution is found to the situation in Ukraine and sanctions are lifted. At present Russian military action doesn’t appear to be coming to an end, although it does appear Putin may have scaled back his original invasion plans.
Unless there is a major change in policy from the EU, sanctions will remain in place until Russia fully withdraws its troops from Ukrainian territory. Even if this does happen, there is no guarantee that sanctions will be lifted immediately and the economic fallout from the military action will be felt for a long time after it ceases.
Fitch has also confirmed they will withdraw ratings on all Russian entities and their subsidiaries before the April 15th deadline set by the EU. A directive banning the provision of credit ratings to legal entities, organizations and bodies established in Russia was made on March 15th.