By Josh Beckerman
Moody's Investors Service has downgraded Russia's sovereign debt
rating to junk status, citing the conflict in Ukraine, low oil
prices and the weakened ruble.
The rating was lowered to Ba1 from Baa 3.
Moody's believes "the government's financial strength will
diminish materially as a result of fiscal pressures and the
continued erosion of" Russia's foreign exchange reserves due to
capital outflows and restricted access to international capital
markets.
Moody's also downgraded Russia in January, signaling a possible
further downgrade.
The rating firm said at the time that it expected Russia's real
gross domestic product to grow around 5.5% in 2015 and 3% in 2016,
bringing real growth over the 10-year period through 2018 to
"virtually zero."
Moody's continues to maintain a negative outlook for Russia.
Standard & Poor's cut the country's credit rating to junk in
January, sending it below investment grade for the first time in
more than a decade. Also in January, Fitch Ratings cut its rating
to BBB-, the brink of junk.
According to an Interfax report, Russia's economy contracted
1.5% in January compared with the same period a year earlier.
Economic data published Wednesday showed Russia's economy moving
further toward recession under the weight of Western sanctions and
a sharp decline in the price for oil, its main source of hard
currency.
Write to Josh Beckerman at josh.beckerman@wsj.com
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